AB Foods share price: Primark joins toxic-free trend

Discount fashion retailer yields to Greenpeace demands to eliminate hazardous chemicals from clothes by 2020

iNVEZZ.com, Tuesday, February 11: British discount fashion chain Primark, owned by food and retail giant Associated British Foods (LON:ABF), joined the growing number of brands committing to eliminate hazardous chemicals from its supply chain.

Primark was one of 12 companies identified in a Greenpeace investigation last month as selling children's clothes and footwear that contained a range of hazardous chemicals, including hormone-disrupting substances.

The report was the latest study from the NGO’s Detox campaign, which began in 2011 and has secured commitments from 20 major retailers to phase out hazardous chemicals by 2020. Primark’s follows in the footsteps of brands such as Burberry (LON:BRBY), which made its pledge two weeks ago (Burberry share price: Company commits to toxic-free fashion).

In a statement released on its website yesterday, Primark confirmed it was committed to "zero discharges of all hazardous chemicals from the whole lifecycle and all production procedures associated with the making and using of all products Primark produces and sells by no later than 1 January 2020".

To ensure supply chain transparency, the discount fashion retailer will "increase the public availability of our restricted substance list". It also said it will set up public disclosure of discharges of hazardous chemicals in its supply chain.

“Primark’s commitment shows that it refuses to be left behind as toxic-free clothing becomes a fashion trend in the industry,” said Ilze Smit, Detox Campaigner at Greenpeace in a press release yesterday. “From budget retailers like Primark, to luxury houses like Burberry, brands are helping put an end to this toxic nightmare.”

Smit used the announcement to put pressure on other retailers identified in the NGO’s report that have yet to make similar commitments. “Laggards like Adidas and Disney need to act now to stop these hazardous little monsters once and for all,” she remarked.

Analysts on AB Foods share price

Last week, Morgan Stanley analysts said in a research report that investors are “fundamentally mispricing” Primark (AB Foods share price rises on Primark under-valuation call). The valuation call has underpinned the brand’s parent company, AB Foods.

However, so far this week, the food and retail group has been trading lower. As of 10:36 UTC today, AB Foods’ share price had fallen to 2,800p, 0.36 percent down on the day.

The FTSE 100-listed company has been the subject of several recent research reports. Last Thursday, Sanford C. Bernstein reiterated its ‘market perform’ rating and currently has a 1,800p price objective on AB Foods, indicating a potential downside of 36.78 percent from the company’s current share price. A day earlier, analysts at Canaccord Genuity, whose price objective on the stock is 1,680p, restated their ‘sell’ rating.

Following these most recent rating updates, four research analysts have a ‘sell’ rating on AB Foods, 13 have it as a ‘hold’ and five rate it as a ‘buy’. The stock’s average rating is ‘hold’ with a consensus price target of 2,187.20p.

As of 10:16 UTC, buy AB Foods shares at 2798.00p.

As of 10:16 UTC, sell AB Foods shares at 2796.00p.

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