Primark promises no more price hikes in vow to protect customers
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Primark pledges no more price hikes in vow to protect customers from rising cost of living
Primark is going head-to-head with its competitors with a promise not to raise prices further as customers struggle with the rising cost of living.
The discount clothing retailer said it would no longer pass on the “significant” cost increases it faces – after it had already increased the price of its fall and winter and spring and summer ranges.
George Weston, boss of Primark owner Associated British Foods (ABF), said there was little point in raising prices if customers couldn’t afford them.
Primark said it would no longer pass on the ‘significant’ cost increases it faces – having already increased the price of its fall and winter and spring and summer ranges
He said: “We have to get through this period with our reputation as the best value clothing retailer, both on the high street and online, intact.”
Weston, 58, said it is “absolutely the right choice” to protect customers rather than raise prices to keep profit margins intact.
Despite forecasting massive sales growth for the year through next September, Primark’s profits would be hit by the decision, he said.
But ABF shares rose 2.1 percent, or 29.5 pence, to 1,458 pence as investors welcomed the move, which Weston said will benefit the group “in the long run.”
Hargreaves Lansdown analyst Sophie Lund-Yates said: “Without being the affordable name on the high street, Primark loses almost all of its bargaining power.”
Shareholders were energized by the unveiling of ABF’s first-ever share buyback, worth a total of £500 million.
That came on top of an 8 per cent increase in the annual dividend to 43.7pa share – or £346 million in total.
The payouts followed an increase in sales across the group, which also owns Silver Spoon, Twinings and Kingsmill.
Group sales reached £17 billion in the year to 15 September, up 22 percent from a year earlier. Meanwhile, total profits rose 48 percent from a year ago to £1.1 billion.
Primark sales received a boost as shoppers returned to the high street after Covid. Turnover rose 43 percent in the year to £7.7 billion, with profits more than doubling to £756 million.
Despite the disruption to the supply chain and the cost of living, Weston said “life is so much better.”