Primark is taking the fight to its competitors with a vow to not raise prices further as customers struggle with the spiralling cost of living.
The discount clothing retailer said it would not pass on any more of the ‘significant’ cost increases it is facing – having already increased the price of its autumn and winter and spring and summer ranges.
George Weston, boss of Primark owner Associated British Foods (ABF), said there was not much point raising prices if customers could not afford them.
Primark said it would not pass on any more of the ‘significant’ cost increases it is facing – having already increased the price of its autumn and winter and spring and summer ranges
He said: ‘We must come through this period with our reputation for being the best value clothing retailer, whether on the high street or online, intact.’
Weston, 58, said it is ‘absolutely the right thing’ to protect customers as opposed to hiking prices to keep profit margins intact.
Despite forecasting bumper sales growth for the year to next September, Primark’s profits would take a hit from the decision, he said.
But ABF shares jumped 2.1 per cent, or 29.5p, to 1458p as investors cheered 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 its bargaining power.’
Shareholders were boosted by ABF unveiling its first ever share buyback, worth a total of £500million.
That came on top of an 8 per cent hike in its annual dividend to 43.7p a share – or £346million in total.
The payouts followed a surge in sales across the group, which also owns Silver Spoon, Twinings and Kingsmill.
Group sales hit £17billion in the year to September 15, up 22 per cent from a year earlier. Meanwhile, overall profit jumped 48 per cent from a year ago to £1.1billion.
Primark sales were boosted by shoppers returning to the high street after Covid. Sales jumped 43 per cent in the year to £7.7billion, with profit more than doubling to £756million.
Despite supply chain disruption and the cost of living crisis, Weston said ‘life is so much better’.
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