Primark owner sees profits soar as it hails stronger business conditions
Associated British Foods said consumers remain under some pressure from the cost-of-living crisis.
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Your support makes all the difference.The owner of Primark has seen half-year earnings soar by more than a third, as it launched new stores, lifted prices and hailed the return of better business conditions.
Associated British Foods, which also owns household brands spanning from British Sugar to Blue Dragon and Dorset Cereals, said consumers remain under some pressure from the cost-of-living crisis.
The company revealed its pre-tax profit hit £881 million in the six months to March, up 37% compared with the same period last year.
It said this was a consequence of investment in previous years on expanding its stores and making parts of the supply chain like warehouses more efficient.
Group revenues ticked up 5% at constant currency to £9.7 billion, driven by demand across its retail and food businesses.
Until interest rates start coming down, I think many families will still struggle
Sales at Primark were lifted by newly opened stores and price rises put through on some clothing lines last year, as part of efforts to cushion the impact of cost inflation.
Shoppers put slightly fewer items in their baskets over the period as households continue to see incomes squeezed.
AB Foods chief executive George Weston said “on every shopping trip, people have been buying a little less”.
He added: “The consumer is still short of disposable income. The situation is improving a bit… some of the pressure has reduced.
“But until interest rates start coming down, I think many families will still struggle.”
Mr Weston stressed that while some prices lifted last year in response to cost increases, Primark has no plans to raise prices in the future as it aims to remain the “best value retailer on the high street”.
He also revealed conditions have improved, with costs starting to come down and the “restoration of some normality in our markets and in our supply chains”.
He said this is being seen in a reduction in shipping costs, and supply chain disruption easing since the Covid-19 pandemic.
The impact of recent attacks on container ships in the Red Sea has had much less impact than it feared, adding less than a week’s delay to some shipments from China and South-East Asia, Mr Weston added.
Meanwhile, Primark announced it is planning to launch its “click and collect” service across the UK after trialling it in a number of stores.
It is set to be rolled out in all stores in England, Wales and Scotland by the end of 2025, which Mr Weston said will give shoppers access to clothing and homeware ranges they will not find in local shops.
The chief executive raised the alarm again over retail crime, specifically violence against shop workers – which he said is happening every day across the sector.
“That’s something really only the police and prosecution authorities can tackle,” he said, adding: “It hasn’t got better.”
In the meantime, he said the retailer has taken action including building a good partnership with local police forces, installing more body cameras for staff, and bringing in more security guard hours.