Primark feels the chill but vows no price rises
PRIMARK owner Associated British Foods says that it will hold off from further price increases, as shoppers’ finances are so tight they will not be able to afford them.
Speaking at ABF’s full-year results, chief executive George Weston said that even though the company faces “substantial and volatile” costs, there was no point in putting up prices as it would simply hit sales.
Mr Weston said that having already hiked its prices this year for the first time in nine years, Primark will now hold them to protect both its market position and consumers.
He said: “We’re not going to implement further price increases on this year’s range. We have to come out of this period with our core proposition of everyday affordability and price leadership intact, and we will.
“We also expect to see reduced disposable consumer income, so if you put your prices up, we think we’ll just sell less. So, both for a profit perspective and also for our brand and reputation perspective, we’re going to leave the prices where they now are.”
ABF, which owns food businesses including Twinings, Ryvita, Kingsmill, Silver Spoon and Patak’s, saw its pretax profits for the year to September 17 rocket 48 per cent to £1.1billion, while its revenues climbed 22 per cent to approximately £17billion.
However, Mr Weston said that it took a £206million write-off at Primark’s German business, which it is restructuring, in order to make it more cost effective.
He explained that when Primark entered Germany in 2009, it was so well received that it opened more and bigger stores than it should have. Then the pandemic hit and added to its problems.
“We’re in a position where we’re losing too much money in the German market,” he said. “And hence the impact. We do see a real opportunity for Primark in Germany.
“We have our place there. We just have a cost base that’s too high.”
Elsewhere, Morrisons and Waitrose are the only major supermarkets suffering falling sales, according to data from Kantar.
German discounters Aldi and Lidl increased their market share.