Associated British Foods PLC (LSE:ABF) said it will not be implementing further price hikes at Primark for the upcoming year after reporting a jump in annual profits.
The group also announced a £500mln share buy-back programme for the current financial year.
Given the likelihood of consumers tightening their purses, it said it will not be raising prices throughout the financial year beyond those already implemented and planned.
Additionally, the group expects significant further input inflation, specifically in raw materials and energy costs, to eat away at margins.
As a result, the FTSE 100 retailer kept guidance for the current year unchanged, with adjusted operating profit and adjusted earnings per share expected to be lower than the year just finished.
For the 12 months to 17 September 2022, ABF reported a 22% jump in revenue on a constant currency basis to £16.99bn, while adjusted profit before tax grew 49% to £1.35bn.
“The performance was achieved despite pandemic-induced disruption being followed by high and volatile input cost inflation,” said chief executive George Weston.
ABF was boosted by sales at its clothing arm Primark, which saw a “significant increase in customer footfall and sales densities” after Covid restrictions were eased, resulting in sales of £7.7bn, 43% ahead of the year prior on a constant currency basis.
According to a statement, it continues to build Primark’s digital offering, with its click and collect service trial launching in 25 UK stores.
The Food arm of the business saw 10% growth in sales, with adjusted operating profit for sugar, agriculture and ingredients ahead of last year, although it reported a fall in the grocery margin to 10.7% from 11.5%, reflecting a lag in pricing to recover input cost inflation.
The company is paying a final dividend of 29.9p a share, taking the total payout to 43.7p, a rise of 8% on the previous year.