Fiscal 2022 As Expected for ABF, but Cost Pressures Raise Questions for Primark’s Model in Germany

A potential repositioning in Germany—Primark's third-largest market by selling space—was one of the key takeaways from no-moat Associated British Foods, or ABF's, full-year fiscal 2022. Otherwise, the update offered little surprise compared to the pre-close announcement shared in mid-September 2022. With both fiscal 2023 guidance and our long-term expectations for ABF largely unchanged, we reconfirm our fair value estimate of GBX 2,200 per share. ABF shares screen as attractive, with the stock trading in the 4-star territory amidst investor uncertainty for the company's disparate business segments and temporary profitability headwinds at Primark.