Primark Owner Considers Overseas Investment Following UK Budget

Associated British Foods (ABF), the company that owns Primark, has indicated that the recent government Budget could prompt it to increase investments beyond the UK, driven by concerns that the High Street sector will disproportionately carry the “weight of tax rises”. George Weston, ABF’s chief executive, commented: “We’re an international business as well, we have choices about where we will invest.” This announcement coincides with the fast fashion brand’s owner reporting a 43% increase in pre-tax profits, amounting to £1.9bn for the financial year ending 14 September. The company stated that “challenging weather” negatively impacted store footfall from April to June, yet it anticipates robust sales during the Christmas period. On Tuesday, subsequent to its most recent investor briefing, ABF’s head confirmed that the company is bracing for increased expenses following new policies implemented by Chancellor Rachel Reeves. In Labour’s inaugural Budget in 14 years, the chancellor outlined various reforms, notably an increase in national insurance (NI) contributions for employers. Mr. Weston indicated that these changes would cause ABF’s wage expenses to “go up by tens of millions”. He further asserted: “It’s quite clear to me that this a Budget where the weight of the tax rises are falling on business – within that, it’s fallen particularly on the high street,”. In an interview with the BBC’s Laura Kuenssberg on Sunday, Ms. Reeves acknowledged that she was not “immune” to the critiques directed at her proposals. She proposed that the funds generated would contribute to establishing public finances on a “firm footing”. Numerous businesses have criticized the choice to raise employers’ NI contributions. Notwithstanding the anticipated increase in costs, Mr. Weston informed the PA News agency that Primark has “no intention” of increasing its prices for the remainder of the year. Excluding the impact of new store openings, Primark’s sales in the UK and Ireland collectively rose by 0.7% during the year concluding on 14 September. The company noted that sportswear, jumpers, and pyjamas performed exceptionally well within its womenswear collections. The fashion retailer reported a robust beginning to sales of its autumn and winter lines, even though wetter conditions adversely affected sales of summer footwear and beachwear. Primark experienced an overall sales growth of 6% for the year, with shirts and leisurewear items performing strongly in menswear. This information emerges as the British Retail Consortium (BRC) has cautioned about a “disappointing” October. The BRC posited that consumers were deferring purchases of more expensive items, awaiting the “Black Friday” sales. The consortium’s most recent data indicates that overall retail sales throughout the UK rose by 0.6% year-on-year in October, a decrease compared to the 2.6% recorded in October 2023. Helen Dickinson OBE, the chief executive, stated: “This was part driven by half-term falling a week later this year, depressing the October figures, and November sales will likely see more of a boost,”. Ms. Dickinson also proposed that the Budget and escalating energy costs could have “spooked some consumers,” and attributed the recent milder weather to a delay in winter purchases such as coats and jackets. Separately on Tuesday, the online retail behemoth Asos disclosed increasing losses, totaling £393m for the year ending 1 September. As part of its turnaround strategy, the group has decreased inventory and initiated clearance sales to liquidate older collections. Chloe Collins, who serves as head of apparel at the research firm GlobalData, indicated that the retailer has not managed to “combat the enormous threat” posed by competitors such as Shein, alongside the growth of second-hand clothing platforms like Vinted. However, Asos chief Jose Antonio Ramos Calamonte noted the emergence of some “green shoots” in the performance of its newer clothing lines over recent months. He affirmed: “We will do things in the right way and we’re going to be patient,”. Copyright 2024 BBC. All rights reserved. The BBC is not responsible for the content of external sites. Read about our approach to external linking.