Shoppers will be paying more for their clothes from high street favourite Primark this autumn.
The clothing chain has warned it will have to increase prices across its autumn and winter ranges as the cost of living crisis gripping the UK hits high street fashion. The budget fashion chain has said it will make “selective” rises in the range, having avoided most inflationary pressures until now because global exchange rates fell in its favour, reports the Manchester Evening News.
But Associated British Foods, which alongside Primark owns a number of other well-known brands, including Twinings and Ryvita, is also a major sugar producer. It said the strengthening US dollar and soaring inflation is forcing the changes.
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Chief executive George Weston said: “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.”
Primark is not the only UK business having to make some tough decisions around pricing. Rocketing energy prices as well as the cost of raw materials and staff, are forcing other retailers to raise their prices to offset the impact of inflation - although many are loathe to follow this route for fear of discouraging people from shopping with them.
However, despite price rises, Primark is expecting to see its sales increase as it opens more stores, expanding its so-called selling space by 10% compared with the end of the 2019 financial year.
AB Food said: “As a consequence, total sales for Primark in the second half are anticipated to be ahead of the second half of the 2019 financial year, which was pre- Covid." The company added that it has seen a fall in Twinings retail sales over the past six months compared with a year earlier when people were drinking tea at home.
But this was offset by the launch of new products in its Wellbeing range of teas. AB Foods’ pre-tax profit rose 131% to £635m in the six months to the start of March, as revenue rose by a quarter to £7.9bn.
Mr Weston 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. Our food businesses have once again proved their operational resilience and sugar had another strong period, building on its recent track record of recovery.
“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.”
Keith Bowman, investment analyst at interactive investor, said: “In all, inflationary cost pressures are proving an increasing headache. The lack of a significant online presence over the course of the pandemic contrasts with that of clothing rival Next, whilst economic uncertainty and geopolitical tensions continue to warrant consideration. On the upside, both overall group sales and operating profit have returned to pre-Covid levels.”
