// Primark parent company AB Foods promises not to see increase prices despite Brexit uncertainty
// Company said it would take a hit to profits rather than pass price increases onto its shoppers
// AB Foods also plans to mitigate Brexit-related cost increases by reducing material prices and improved buying, as well rent negotiations
Primark’s parent company AB Foods has pledged not to increase prices despite seeing costs jump due to Brexit.
AB Foods finance director John Bason told PA that the company take a hit to profits rather than pass price increases onto its shoppers.
“Consumers can comfortably expect no price increases,” he told the news agency.
“We are managing the decline in the pound and we accept it will affect margin and take that on board ourselves.”
READ MORE:
Bason said Primark has a “history” of keeping prices low and will continue to shield its customers while it can despite increasing costs from the depreciation of the sterling since the Brexit referendum three years ago.
AB Foods said the declining pound coupled with a strong dollar meant there would be “increase the cost of goods for next year”.
However, two thirds of its profit is earned outside the UK, AB Foods actually expects to gain £10 million through the weaker pound.
The company also said it would look to mitigate Brexit-related cost increases by reducing material prices and improved buying, as well as “stern negotiations” with landlords when Primark leases come for renewal to reduce rents “in line with UK competitors”.
Yesterday, the company said profits for the year are expected to be in line with expectations, as “strong performances” for Primark and its grocery arm offset a decline in its sugar business.
According to a pre-close trading update that covers the year to September 14, AB Foods said full-year sales at its retail division – or Primark – are likely to be up four per cent both on a reported and currency-neutral basis.
It said this was driven by the opening of 14 news stores worldwide – including its biggest store yet in Birmingham.
However, excluding the news stores, AB Foods said that on a like-for-like basis Primark’s full-year sales are expected to fall two per cent – with like-for-like sales in the UK dipping one per cent and three per cent in the Eurozone.
Despite the anticipated decline in like-for-likes, AB Foods said Primark “has performed well” in the UK against a backdrop of a weak fashion market, and that it continued to deliver a “significant” gain in market share.
Click here to sign up to Retail Gazette‘s free daily email newsletter
