Primark pledges not to increase its prices
Bosses at Primark's owner have promised customers that the fashion retailer will not increase prices, despite seeing costs jump due to Brexit.
John Bason, finance director at the fashion chain's owner Associated British Foods (ABF), said the company will take a hit to profits rather than pass price increases onto shoppers.
"Consumers can comfortably expect no price increases. We are managing the decline in the pound and we accept it will affect margin and take that on board ourselves," he said.
Last week Primark chief executive Paul Marchant, said it could be four years before it reopens its Bank Buildings store in Belfast after it was devastated by fire last year.
ABF'S finance boss said Primark has a "history" of keeping prices low and will continue to shield customers while it can. ABF's Grain Products division also owns Neill's Flour in Belfast.
ABF said that the recent collapse in the value of the pound due to Brexit uncertainty, alongside a strong dollar, will "increase the cost of goods for next year".
However, it added that, because two thirds of its profit is earned outside the UK, the whole group actually expects to gain £10m through the weaker pound.
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The company said that profits for the year to September 14 are expected to be in line with expectations, as "strong performances" for Primark and its grocery arm offset a decline in its sugar business. Full-year sales at Primark are expected to increase by 4% compared to the previous year, driven by 14 new store openings.
Like-for-like sales, which strip out the boost from new stores, are predicted to be down 2% for the period due to the "weak UK market".
"Primark has performed well in the UK, where sales in the total clothing, footwear and accessories market have been weak," the company said, as it revealed a 1% decline in like-for-like UK sales.
ABF added that it would look to mitigate Brexit-related cost increases by reducing material prices and improved buying but expects "reduced margin".
Mr Bason also said the firm will have "stern negotiations" with landlords when leases on Primark properties come for renewal, to reduce rents "in line with UK competitors" and push costs lower. The company said sales in its grocery division, which includes brands such as Twinings and Ryvita, are expected to be ahead of last year, while profits will be "well ahead". The Twinings Ovaltine business made "good progress" during the year, it said.