Primark in price pledge
Primark owner Associated British Foods has warned of flat annual earnings after it pledged to keep the retail chain's price tags competitive in the face of soaring cotton costs.
The group said it was "determined" to ensure Primark remained a price leader on the high street to help revive flagging sales growth.
But AB Foods said profits would be impacted by the hit to margins as it also battles against sky-high commodity prices in its grocery and sugar businesses.
The news overshadowed interim results showing a 7% rise in underlying pre-tax profits in the six months to March 5, sending shares down more than 6%.
Primark saw a sharp slowdown in operating profit growth during the half-year, up 5% to £151m against a 35% improvement in 2010.
Charles Sinclair, chairman of AB Foods, said: "We are determined that Primark will retain its position as price leader and margins in the second half will be lower than previously planned."