Primark boss warns shoppers are still struggling as the business posts flat half-year profits
The boss of Primark’s owner has warned that consumer confidence is ‘still very low’ as the business posted flat half-year profits.
Associated British Foods chief executive George Weston said that the 24 weeks to March 4 was ‘marked by extreme and volatile inflation’ across the fashion retailer and its food divisions. Profit for the period came in at £644million, nudged up by just 1 per cent compared to the year earlier.
Weston told the Mail that shoppers’ enthusiasm to buy new clothes amid the cost of living crisis had ‘improved a little bit’.
But he said: ‘Consumer confidence is still very low.’
Associated British Foods chief exec George Weston (pictured) said that the 24 weeks to March 4 was ‘marked by extreme and volatile inflation’
Sales in the UK increased by 15 per cent as shoppers returned to the budget fashion retailer’s stores on the High Street and in retail parks, when compared to the previous year.
‘We will be able to tell more when the weather turns and we see what the response to the spring and summer ranges is,’ he said. ‘It is hard work selling spring or summer clothes when it is still zero degrees in the mornings.’
Products that have been flying off the shelves at Primark include a 1980s-style short pink unitard priced at £10 and a £20 stone-coloured summer dress.
Although prices of products were increased, the business ‘chose not to recover all the input cost inflation in Primark’, Weston said, in a bid to retain market share for shoppers looking for affordable outfits.
Cautious price increases had wounded profits, with Primark posting £351million for the first half, down 15 per cent on the year earlier.
ABF stuck to previous full-year expectations for profit and earnings per share to ‘be broadly in line with’ last year.
But Russ Mould, investment director at AJ Bell, said there was ‘enough cautious news to drive ABF’s share price down.’
Shares fell 4.2 per cent, or 86p, to 1984p yesterday.
The retailer said it was looking to expand its presence in the southern states of the US, including in Texas.
And the retailer is ramping up the number of stores involved in a click-and-collect trial, which launched in 25 stores last year.
Mould said Primark was clearly aware it would be ‘dangerous’ to shun an online offering, hence the click-and-collect trial, which was ‘obviously going well’ given the rollout.