Primark promises no price hike despite rising costs

The Herald Scotland

29-04-2025

"We went nine years without moving prices before inflation forced us to change pricing a couple of years ago, but since then we have brought down the price of kids' clothing," said George Weston, chief executive of Primark owner Associated British Foods.
"We haven't moved any more prices and are absolutely not planning to move any more. Hopefully we can keep them flat for another eight or nine years."
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He added there had been some benefit from weakness in the US dollar and benign cotton costs, while the company is "choosing to absorb" rising labour costs.
Retailers and hospitality providers have been hit particularly hard by the increase in employers' national insurance contributions that came into effect at the beginning of this month, with a number warning of higher prices and job losses as a result.
Primark has 187 British stores that generated 46% of sales in the first half of the financial year. Its next largest market is Spain and Portugal, where sales grew by by 18%, followed by France and Italy (up 4%), Northern Europe (up 1%), the US (up 17%) and central and eastern Europe (up 21%).
Primark's overall sales grew by 1% to £4.47bn, aided by new store openings abroad.
Commenting on the impact of the tariff farrago in its results statement, AB Foods cautioned that several countries could slide into recession as a result of US trade policy.
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'Sentiment is unlikely to improve as markets continue to face uncertainty and instability following recent tariff announcements by the US, retaliatory actions by China and the risk of further tariff trade wars.
'Consumer confidence could deteriorate further as a number of countries, including the US, face the risk of recession that could increase individuals' debt problems.'
The search for a successor to former Primark chief executive Paul Marchant is "underway", the company said yesterday. Mr Marchant resigned last month, admitting an "error of judgement", following an allegation by a woman about his behaviour in a social setting.
Group revenues at AB Foods, whose food and ingredient brands include well-known favourites such as Kingsmill and Ryvita, dipped by 2% to £9.5 billion with adjusted pre-tax profit falling 10% to £818m as the performance at its sugar division turned sour.
"A sharp fall in sugar prices saw the division turn loss-making, with underlying operating profits down more than £140m on last year," said Aarin Chiekrie, equity analyst at Hargreaves Lansdown.
"The regulatory picture for its bioethanol plant, Vivergo, is making operations unviable too, and unless current discussions with the UK government are fruitful, ABF could be forced to close the plant, at least temporarily.'
AB Foods has cut production at its Vivergo bioethanol plant in London and has threatened to close it unless the government steps in to change regulations. The business made an operating loss in the first six months of the financial year.
The conglomerate's diversified business model was a boon during the pandemic and continues to benefit, with the grocery and ingredients divisions doing much of the heavy lifting in the first half of the year while retail and sugar struggled. Even so, analysts at AJ Bell said Primark's underperformance was "worrying" given that warm temperatures should have driven increased footfall into stores.
'They will be looking at whether they are getting the basics right – putting the right product in the right places at the right times and right price points to get people through the tills," analysts said in a note to investors. "It badly needs to arrest a loss of market share.
'Making life more difficult in terms of getting things on track is the recent departure under a cloud of Primark's longstanding CEO Paul Marchant. The chain badly needs someone permanent to provide it with direction for the future.'