Primark has promised that its customers will not face any more price hikes despite an expected drop in profits for the fast fashion giant.
It comes after the clothing company’s parent store, Associated British Foods (ABF), recently announced planned hikes in costs for the autumn/winter seasons this year and spring/summer seasons next year.
The company expects to record £7.7b in sales in 2022, a jump of 40% when compared to last year, resulting in adjusted profits of 9.6% for the whole year and 8% for just the second half.
Despite these rapidly rising numbers, it has predicted that Primark will take a hit in profits next year as a result of recent movements in currency and energy prices, as well as its decision to limit further price increases next year.
In a statement, ABF said: “Against this current volatile backdrop and a context of likely much reduced disposable consumer income, we have decided not to implement further price increases next year beyond those already actioned and planned.
“We believe this decision is in the best interests of Primark and supports our core proposition of everyday affordability and price leadership.”
It alluded to strategies in the pipeline which would aim to improve store labour efficiency and deliver lower operating costs to combat the “volatile backdrop” of a weakening pound and euro against the US dollar and rising energy prices.
The news came hours before the new Prime Minister revealed an energy price freeze to help consumers and businesses tackle soaring bills.
Liz Truss announced the freeze will apply for the next two years from October 1 under a new Energy Price Guarantee, limiting the price that suppliers can charge customers for units of gas.
A new six-month scheme for businesses and other non-domestic energy users, including charities and public sector organisations, will offer equivalent support as is being provided for consumers.
ABF stated: “We expect sales growth to be driven by the increase in retail selling space and like-for-like growth resulting from both the price increases implemented for autumn/winter this year and those planned for spring/summer next year.
“Primark has already been managing the challenges of supply chain disruption, inflation in raw material and energy costs and in labour rates, alongside the higher purchasing costs which have resulted from the strengthening of the US dollar over this financial year against sterling and the euro.
“To mitigate these pressures, in addition to the price increases mentioned above, there are also plans to improve store labour efficiency and deliver lower operating costs.”