Despite the swirling turmoil surrounding the U.K.’s scheduled exit from the European Union in October, British retailer Primark has vowed not to raise prices for consumers.
John Bason, the finance director for Associated British Foods (ABF), which owns Primark, told the Press Association News Agency on Monday that regardless of the challenges, the company is still going strong. Though Primark’s costs will rise this year, the brand’s sales and profits are growing, he said.
Many U.K. high street brands are facing the consequences of the falling value of the British pound due to Brexit uncertainty. Still, Primark and ABF are on track to see gains. Primark does about two-thirds of its business outside of the U.K., Bason said, and the company expects to gain about 10 million pounds this year.
Because of its relatively strong positioning, ABF sought to head off consumer concerns with a vow to preserve prices. “Consumers can comfortably expect no price increases,” Bason told PA News Agency.
The ABF Group said year-to-date profits by Sept. 14 are expected to line up with expectations, and that Primark and ABF’s grocery sector’s “strong performances” have offset a decline in the company’s sugar business.
Over the past year, Primark has opened 14 new stores in the U.K., which ABF credits with the brand’s 4 percent growth in sales. Analysis of the brand’s overall performance when stripped of the new store boost revealed that sales are projected to decrease by 2 percent by Sept. 14 due to the “weak U.K. market,” ABF told PA News Agency.
“Primark has performed well in the UK where sales in the total clothing, footwear and accessories market have been weak,” the company said, revealing that so far, like-for-like sales in the U.K. have decreased by 1 percent.
The company plans to keep prices low by reducing material prices and improving its buying strategy, as well as having “stern negotiations” with landlords when Primark property leases come up for renewal, Bason said. Still, he expects that reduced margins are a reality the brand will have to face.
“We are managing the decline in the pound and we accept it will affect margin and take that on board ourselves,” he said.