Primark owner Associated British Foods saw its profits nearly double in the first half of its financial year, but the group warned that due to spiralling inflation, its fashion chain would have to increase prices.
Growth across the board
For the 24 weeks ending 5 March, AB Foods saw its adjusted operating profit rise from 369 to 706 million pounds (840 million euros). In the same period, the group’s income increased by a quarter to 7.88 billion pounds (9.4 billion euros).
The group’s food branch – still larger than its fashion sibling Primark – had its growth limited to only 6 % to 4.34 billion pounds (5.2 billion euros) as it had to battle several major challenges (logistics, price hikes of raw materials, absences because of Covid). The group operates brands such as Twinings, Ryvita and Jordans cereals, as well as a range of bakeries, mills and producers of bakery ingredients.
Primark reaches expectations
Primark even saw growth of almost 60 % to 3.54 billion pounds (4.2 billion euros) as almost all stores remained open throughout the period. The short closings in Austria and the Netherlands were only small nuisances compared to the longer forced closings throughout the whole of Europe in the same period of last year, the company said. With the 59 % growth, the fashion chain only nearly missed its target of 60 % put forward in February.
Nevertheless, ABF warned that expected inflation is now so great that the company will not able to offset rising costs merely with by cutting cost, therefore some of its autumn/winter stock will see price hikes. “However, we are committed to ensuring our price leadership and everyday affordability, especially in this environment of greater economic uncertainty”, CEO George Weston stressed.
“Notwithstanding the inflationary pressures we are experiencing, our outlook for the year is for significant progress in adjusted operating profit and adjusted earnings per share for the Group”, Weston added.