Primark has announced it will increase prices for its Autumn and Winter collection as costs rise for businesses around the world.
The budget fashion chain will “selectively” increase its range after avoiding most of the inflationary pressures so far as global exchange rates have fallen in its favour.
In a statement to Independent.ie, a Primark spokesman said: “With inflationary pressures mounting and the dollar strengthening, we will be implementing selective price increases on some of our Autumn/Winter stock.”
“However, we are committed to ensuring our price leadership and affordability in everyday life.”
But AB Foods, which owns Primark and Twinings in the UK and is also a big sugar producer, said the US dollar is strengthening and inflation is rising, which will force the changes.
Chief Executive George Weston said: “Inflationary pressures are such that we cannot all offset them through cost savings and as a result Primark will be making selective price increases on some autumn/winter stock.
“However, we are committed to ensuring our price leadership and affordability on a day-to-day basis, especially in this environment of greater economic uncertainty.”
Millions of businesses across the UK have to make decisions about their prices. The cost of the energy they need to run their operations has skyrocketed in recent months, and the cost of the raw materials and staff they need is also increasing.
Some have chosen to pass this cost on to customers, although many are cautious as it will likely put people off buying from them.
Despite price hikes, however, Primark expects sales to increase as it opens more stores and expands its so-called retail space by 10 percent from where it ended fiscal 2019.
“As a result, Primark’s total sales in the second half are expected to be ahead of the second half of fiscal 2019, which was pre-Covid,” AB Foods said.
The company added that retail sales in Twinings have fallen in the last six months compared to a year earlier when people were drinking tea at home.
However, this was offset by the launch of new products in the wellbeing tea range.
AB Foods’ pre-tax profit rose 131 percent to £635 million in the six months to early March, while sales rose by a quarter to £7.9 billion.
Mr Weston said: “This half year saw the Group’s sales and operating profit return to pre-Covid levels. Our employees have responded well to the many challenges we have faced.
“Our grocery businesses have once again demonstrated their operational resilience and sugar had another strong streak building on its recent track record of recovery.
“Measures have been taken to mitigate higher costs across all of our businesses and more are planned.
“Primark achieved a significant increase in sales and profits as stores are now open and trading largely free of restrictions.”
Keith Bowman, investment analyst at Interactive Investor, said: “Overall, inflationary cost pressures are a growing headache.
“The lack of a significant online presence as the pandemic has unfolded contrasts that of apparel competitor Next, while economic uncertainty and geopolitical tensions remain worthy of attention.
“On the positive side, both total group sales and operating income have returned to pre-Covid levels.”
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