Core Viewpoint - Associated British Foods (ABF) is considering separating its Primark retail arm from its food operations to maximize long-term value following a strategic review [1][2] Financial Performance - ABF reported a decline in group revenue to £19.45 billion ($25.42 billion) for the fiscal year ending on 13 September 2025, down 3% at actual exchange rates and 1% at constant currency [3] - Adjusted operating profit decreased by 13% to £1.73 billion, with a similar drop in adjusted profit before tax to £1.69 billion [3] - On a statutory basis, operating profit fell 23% to £1.48 billion, and profit before tax decreased 26% to £1.41 billion [4] Retail Performance - Retail sales increased by 1% to £9.5 billion, driven by store openings in Europe and the US, contributing 4% to sales growth [4] - Adjusted operating profit in retail rose 2% to £1.1 billion, with an adjusted operating margin of 11.9% [4] Strategic Review - The review is being conducted with input from ABF's largest shareholder, Wittington Investments, which aims to retain a majority stake in both businesses [1][2] - CEO George Weston expressed support for the board's review of the group structure, emphasizing the potential of both businesses [5][6]

Market Overview - Wall Street is entering a historically strong month, with November being the best month for the S&P 500, averaging a gain of 1.8% since 1950 [1] - The S&P 500 is currently just below the 7,000 mark, significantly above the year-end target of 6,555 predicted by strategists [2] - All three major indexes have shown strong year-to-date gains, with the Dow Jones up 12.2%, S&P 500 up over 16%, and Nasdaq Composite up over 23% as of October 31, 2025 [3] Federal Reserve Policy - The Federal Reserve has entered an easing policy era, having cut interest rates by a quarter percentage point for the second consecutive meeting, bringing the benchmark rate to a range of 3.75%-4.00% [4] - The rate cut reflects the Fed's intention to bolster economic growth and strengthen the labor market amid limited economic data due to a government shutdown [5] U.S.-China Trade Relations - Investor confidence has been boosted by hopes of easing U.S.-China trade tensions, following a meeting between President Trump and President Xi Jinping, where they reached an understanding to pause new trade tensions [6] - China will cease investigations targeting U.S. companies in the semiconductor supply chain, as announced by the White House [7] Consumer Spending Trends - Approximately 91% of consumers plan to celebrate the winter holidays, with average spending expected to be $890.49 per person, a slight decrease of 1.3% from last year's record [8] Investment Opportunities - **High Beta ETF**: Invesco S&P 500 High Beta ETF (SPHB) is recommended due to easing Fed policy and trade tensions, along with anticipated holiday season sales [10] - **Consumer Discretionary ETF**: Consumer Discretionary Select Sector SPDR ETF (XLY) is expected to benefit from increased holiday shopping, with significant holdings in Amazon and Home Depot [11] - **Software ETF**: SPDR S&P Software & Services ETF (XSW) is positioned well due to the growing demand for AI software, which is sold on a subscription basis [12] - **Aerospace ETF**: iShares U.S. Aerospace & Defense ETF (ITA) has reported earnings growth of 226.1% on 15% higher revenues, making it a strong investment option [13] - **Small-Caps ETF**: iShares Russell 2000 ETF (IWM) is favored due to Fed rate cuts, easing trade tensions, and favorable small-cap valuations [14]

Core Viewpoint - Costco is highlighted as a strong investment opportunity due to its affluent customer base and superior value proposition, which has allowed it to maintain consistent strength amidst challenges faced by other retailers [1][2]. Costco - Costco has shown more than a mid-single-digit comparable sales growth on top of a strong gain from the previous year, indicating strong momentum expected to continue through the holiday season [2]. - The company benefits from inflationary pressures as higher-income and middle-income consumers seek value, leading them to Costco for its competitive pricing [4][5]. Competitive Landscape - Walmart is also positioned to perform well in various economic conditions, gaining market share through its value and convenience offerings [8]. - Ulta Beauty is noted for its innovation and strong momentum, particularly in the beauty and wellness sector, where spending remains robust even in challenging economic times [8][9]. Consumer Trends - The consumer spending backdrop is mixed, with limited winners in the current environment, particularly in consumer staples, which are at lows not seen since the late 90s [12]. - Shark Ninja is mentioned as a discretionary consumer durable player with upcoming earnings that may indicate a shift in sales momentum towards Q4 [13].

Exclusive: Investment firm BBRC, which has never run an activist campaign before, is taking aim at Victoria’s Secret, seeking a shake-up of the struggling lingerie retailer’s board https://t.co/Np7dtYjS6r ...

Core Viewpoint - BBRC, which holds a nearly 13% stake in the retailer, has called for the removal of the current chair and the installation of the investor's founder as the new chair [1] Group 1 - BBRC owns a significant stake of approximately 13% in the retailer [1] - The letter sent by BBRC to the board emphasizes a change in leadership [1] - The proposed change involves replacing the current chair with the founder of BBRC [1]

Core Viewpoint - Associated British Foods (ABF) is conducting a review of its structure, potentially leading to the separation of its Primark retail arm from its food operations to maximize long-term value [1][2][6] Company Structure and Review - The review aims to assess whether separating Primark and food businesses would create a better organizational structure for the future [6] - The review is being conducted in consultation with ABF's largest shareholder, Wittington Investments, which intends to maintain majority ownership of both businesses [2] Financial Performance - ABF reported a revenue decline of 3% to £19.46 billion ($25.43 billion) for the year ending 13 September, with a 1% decrease on a constant-currency basis, primarily due to falling sales in the sugar business [4] - Retail sales increased by 1% to £9.5 billion, indicating some resilience in the retail segment despite overall revenue decline [4] - Total operating profit fell by 23% to £1.5 billion, while adjusted operating profit dropped 13% in actual currency and 12% in constant-currency terms, attributed to lower earnings from the sugar segment [5] Business Segments - ABF's food businesses encompass grocery, ingredients, agriculture, and sugar, with notable brands including Blue Dragon, Mazola, and Twinings [2] - The grocery division experienced good sales growth in global brands, although this was offset by challenges in the Allied Bakeries arm in the UK and the US oils businesses [5] - The company announced plans to acquire the Hovis bread business from private-equity firm Endless in August, indicating strategic moves within its food operations [5] Leadership Insights - Chief Executive George Weston emphasized the potential of ABF's food business, which has historically been less understood by financial markets compared to Primark, highlighting its attractive portfolio and global expertise [3] - Chairman Michael McLintock noted the need for a better understanding of the food businesses given Primark's scale and the ongoing review of ABF's future structure [6]

Core Viewpoint - Associated British Foods (ABF) experienced a slight decline in share price due to disappointing full-year results, despite discussions of a potential split of its Primark and food businesses [1][10]. Financial Performance - ABF's group revenues fell by 3% to £19.5 billion for the year ending 13 September, with a 1% decline in sales at constant currencies [1]. - Adjusted operating profit decreased by 13% to £1.7 billion, with a similar 12% drop at stable exchange rates [2]. - Adjusted earnings per share (EPS) fell by 11% to 174.9p [2]. Primark Performance - Primark's sales remained unchanged at £9.5 billion at actual currencies, but increased by 1% at constant currencies [3]. - The fashion unit's adjusted operating profit rose by 2% to £1.1 billion, with operating profit margins improving by 20 basis points to 11.9% [3]. - In the UK and Ireland, Primark's sales dropped by 1% for fiscal 2026, with a 4% decline in the first half attributed to weak market conditions [4]. - Sales rebounded by 1% in the second half of the year as market conditions improved [4]. Regional Performance - Retail sales in Mainland Europe increased by 2% during financial 2026, while US turnover surged by 20% due to ongoing store expansion [5]. Strategic Review - ABF is considering separating Primark from its other businesses to maximize long-term value, with Rothschild & Co engaged for the review [5]. - The review is being conducted in consultation with Wittington Investments, ABF's largest shareholder [5]. Future Outlook - CEO George Weston indicated that the company navigated a challenging environment but saw robust results in most businesses [8]. - There is confidence in the group outlook for 2026, although it is contingent on the unpredictable consumer environment [9]. - ABF anticipates an increase in adjusted operating profit and adjusted EPS for the upcoming year [9].

Corporate Strategy - AB Foods is considering separating its Primark budget retail chain and food business as part of an overhaul of the conglomerate [1]

Group 1 - Spending during the festival season from Sept. 22 to Oct. 21 increased by 8.5% compared to the same period last year, driven by a recent tax cut that spurred purchases across various categories including cars, electronics, kitchenware, and sweets [1][2][5] - Foreign investors reduced their holdings in Indian consumer stocks during the three months ending in September, despite the consumption tax cut [5] - Notable reductions in positions were observed in stocks such as Trent Ltd. and BrainBees Solutions Ltd., as reported by Morgan Stanley analysts [5] Group 2 - The sales surge should be approached with caution, as it may be influenced by pent-up demand, according to economists from Nomura Holdings Inc. [3] - Bank of America Corp. analysts indicated that while some headwinds have eased, factors such as slow income growth, a weak labor market, and a fading wealth effect continue to negatively impact sentiment and demand [3][6]

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