No price rises at Primark as sales slip, owner vows

PRIMARK’S owner Associated British Foods has insisted it will not increase prices for customers as it battles falling sales in the UK.

The High Street chain’s parent company admitted ahead of its results for the year to September 14 that same-store sales in the UK are likely to fall by 1pc. It warned that currency fluctuations would also put pressure on profit margins next year, as the weaker pound and stronger value of the dollar will increase the cost of goods. Primark is known for its cheap fast fashion and homeware including cushions from £3 and children’s pyjamas from £5. Russ Mould, investment director, AJ Bell, said: ‘Primark’s success has arguably been its ability to sell a high volume of cheap goods. Associated British Foods will now have to either stomach lower profit margins by keeping prices the same so as to not risk alienating its customer base, or see if its brand is strong enough to push through higher selling prices without customers going elsewhere.’ But John Bason, Associated British Foods’s finance director, said customers will ‘ have the same old dependable pricing from Primark that they’ve ever had’.

ABF expects Primark’s total sales in the UK to increase 2pc this year, boosted by shop openings. Sales including international stores are predicted to grow 4pc.

Primark will have opened 14 stores by the end of its financial year in the UK, Germany, Spain, France, Belgium, the Netherlands and Slovenia. It is looking to open a further 19 next year, including its first in Poland.

ABF’s business operations span sugar, ingredients, agriculture and grocery, the latter of which houses brands such as Twinings, Dorset Cereals and Ryvita.

Grocery sales are expected to be higher than last year, while adjusted profits are likely to be higher including the £12m cost of closing its Twinings tea factory in China.