The owner of Primark Associated British Foods have warned of lower profit next year, as the fashion brand contends with worsening costs and increasingly cautious customers who are dealing with an income squeeze, sending shares to nearly a decade low.
Primark says it will limit price hikes next year as parent ABF said it was likely that customer’s incomes will reduce further as inflation worsens.
That decision, along with soaring energy, raw material and labour costs, and a stronger dollar that have pushed up its purchasing costs, would squeeze margins at Primark, it said.
It also said that while recent UK sales had proved resilient in its current fourth quarter, outperforming those in wider European destinations. they remained at around pre-COVID levels.
In a statement the Company said that:
“We expect sales growth to be driven by the increase in retail selling space and like-for-like growth resulting from both the price increases implemented for autumn/winter this year and those planned for spring/summer next year”, its statement read.
“Primark has already been managing the challenges of supply chain disruption, inflation in raw material and energy costs and in labour rates, alongside the higher purchasing costs which have resulted from the strengthening of the US dollar over this financial year against sterling and the euro.
“To mitigate these pressures, in addition to the price increases mentioned above, there are also plans to improve store labour efficiency and deliver lower operating costs.”
