Associated British Foods PLC (LSE:ABF) said its Primark chain was forced to increase its famously low prices as the fast-fashion retailer struggles with the closures of some European stores, supply chain disruption and higher energy, logistics and commodities costs.
With incidences of Coronavirus (COVID-19) increasing due to the omicron variant, the FTSE 100-listed group said its five stores in Austria were shuttered, trading hours in the Netherlands were restricted and vaccine passes were required in Germany.
Primark’s profit margin for the new financial year to date, which started mid-September, are ahead of expectations, chairman Michael McLintock said in a statement ahead of AB Food’s annual shareholder meeting.
“Looking ahead we currently expect Primark sales to be significantly better than sales in the comparable period in the last financial year, from December 2020 to April 2021, when the estate was largely closed.”
He said “significant progress” in adjusted operating profit and adjusted earnings per share was expected at group level at both the half and full year.
The company has been working to overcome port congestion and road freight limitations, along with cost escalation.
“We have been implementing plans to offset these through operational cost savings and, where necessary, the implementation of price increases,” he said.
He said Primark like-for-like sales have been up compared to the fourth quarter of its recently completed financial year, though sales in the period were down 17% on a two-year comparison.
Primark shoppers were reassured that while prices may have risen, there was enough stock to cover “the vast majority of lines” for the Christmas trading period.