Primark set to hike prices for autumn/winter range
Primark said it will be forced to raise prices for its autumn/winter stock as it can no longer stave off inflationary pressures.
The fashion company owner – Associated British Foods (ABF) – today revealed its results for the 24 weeks ending 5 March 2022.
Figures reveal Primark sales were up 59% to £3.5bn, with a strong sales recovery due to increased holiday travel and socialising.
‘Selective price increases’
However, ABF chief executive, George Weston, warned of coming price rises as inflation soared to 7% in March – a 30-year high, though it is expected to climb higher to 8% for April’s figure.
He said: “This half year sales and operating profit for the group returned to pre-Covid levels. Our people have responded well to the many challenges we faced.
“Measures to mitigate higher costs in all our businesses have been taken and more are planned. Primark delivered a significant increase in sales and profit, with stores now open and trading largely free of restrictions.
“Looking further ahead, inflationary pressures are such that we are unable to offset them all with cost savings, and so Primark will implement selective price increases across some of the autumn/winter stock.
“However, we are committed to ensuring our price leadership and everyday affordability, especially in this environment of greater economic uncertainty.
“Notwithstanding the inflationary pressures we are experiencing, our outlook for the year is for significant progress in adjusted operating profit and adjusted earnings per share for the group.”
‘Shoppers may be cautious’
Susannah Streeter, senior investment and markets analyst at Hargreaves Lansdown, said: “Cost pressures are mounting for retailers and the fashion behemoth that is Primark is no exception. For the six months to 5 March, it has proved resilient, particularly in the UK and Ireland with sales increasing 59% as customers have snapped up new styles to satisfy pent up demand for socialising and holidays.
“This performance has helped put the shock of the pandemic well and truly behind the group with profits returning to pre-covid levels. This is no mean feat given the retail pain lockdowns caused for Primark. But parent company ABF has warned that it can’t offset soaring input costs with savings alone, so prices will increase on some autumn/winter ranges. This is a tricky manoeuvre to get right given that fans flock to Primark for high fashion at cheap prices and instead of piling clothes high in baskets they may be more cautious which could hit volumes.
“Even so, the company is confident it will stay well placed in the value proposition and reckons it can make progress in adjusted profits despite the pressures ahead.”
It announced an interim dividend of 13.8p per share (2021: 6.2p).