A SLOWDOWN at Primark’s British stores hit the shares of owner Associated British Foods (ABF) yesterday as tax rises and inflation squeezed consumer spending.
The budget retailer’s like-for-like sales growth slowed to three per cent in its first half.
Primark has been a star performer for the company but with materials like cotton spiralling in price and the consumer environment remaining tough, the chain’s growth is now stalling. The company, which also owns Twinings Tea and Silver Spoon sugar, also warned it would be hit by higher sugar costs later this year after the freezing weather took its toll.
ABF finance director John Bason said: “The consumer is being squeezed at the moment. Cotton prices carry on going up. But Primark will remain the best value on the high street and we take some of the [costs] on the nose.”
He added that commodity price inflation, especially higher petrol prices, and the rise in UK VAT to 20 per cent from 17.5 per cent previously had taken its toll. Meanwhile, higher cotton prices signalled price hikes on clothes for other firms.
Next was another retailer yesterday to feel the impact of spiralling costs as investors went cold on the company’s stock which closed down 2.4 per cent at 1,976p.