Primark pull: Cash-strapped customers flock to value chain despite price hikes
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Sales at the value fashion retailer in the UK jumped by 15 per cent in the six months to early March, compared with the same period a year ago, parent company Associated British Foods (ABF) revealed. Across Primark, which includes shops in countries around Europe, sales rose by nearly a fifth to £4.2 billion, beating the group’s expectations for the period. More shoppers returned to high streets and retail parks, and business boomed at city centre stores amid a resurgence in office workers and tourists, ABF said.
Shops also attracted new customers as people hunted down more affordable items amid soaring living costs, leading to an increase in the volume of sales. But average selling prices went up as the business tried to offset some of the impact of cost inflation.
ABF’s chief executive George Weston said customers have already seen the “vast bulk” of price rises at Primark. He added: “We hope that we are returning to a much more normal environment where by and large we don’t increase prices, and we are seeing costs in some areas coming down quite significantly.”
Touching on cost-of-living pressures, Weston said: “When people come into stores, I think they may be buying a greater proportion of their clothes with us than they might have done before. But on average, the basket sizes are down a little, which shouldn't surprise us.”
ABF, which also owns major grocery, sugar, and ingredients businesses, saw its adjusted profit before tax slip by 3 per cent to £684 million. It expects its full-year profits to be broadly in line with the previous financial year as sales growth moderates and its costs go up, such as for higher staff wages.
Richard Hunter, head of markets at Interactive Investor, noted: “AB Foods is steering a steady course through the persistent inflationary storms, with Primark remaining a key driver in the group’s recovering fortunes. The benefits of the group’s diversified business is also mitigating some of the pressures which wax and wane in any given economic cycle.”