Primark hikes US prices in response to tariffs

Primark has begun to raise prices at its US stores in response to President Donald Trump’s tariffs, the boss of the clothing retailer’s parent company said on Wednesday.

“It’s just starting now and it will be fairly broadly across the range, we’ll remain as competitive as ever,” George Weston, chief executive of Associated British Foods said.

“The price rise will be in double digits, that’s what we need to do to recover tariff costs,” he added.

He said Primark, which trades as Penneys in Ireland, had no plans to raise Primark’s prices in the UK this side of Christmas.

Mr Weston was speaking after AB Foods updated on trading.

The group said underlying sales at its Primark business are expected to be down around 2 per cent in its second half, with an improved performance in the UK and Ireland offset by a subdued consumer environment in Europe.

“Looking ahead, we currently expect the consumer environment to remain uncertain,” the group said.

Shares in the company fell as much as 12 per cent in London after the results for their biggest intraday fall in five years.

Like-for-like sales for the last six months in the UK and Ireland were expected to be close to flat, helped by favourable weather, and improving from the 6 per cent fall recorded in the first half of its financial year.

“Year-end trading update reads more cautious relative to its interim outlook,” Davy analysts Cathal Kenny and Gabriele Bunyte wrote in a research note. “In a challenged consumer environment, Primark sales were softer than expected.”

“On first look, see modest downside to our constant currency operating profit forecast for FY25. The absence of commentary for 2026 is notable,” they added.

In Europe, while sales rose in Spain, Portugal and in Central and Eastern Europe, they fell in France, Italy and Germany.

Mr Weston said that “the darkest spot” has been weak consumer sentiment across continental Europe, where “trading in the second half has fallen away reasonably meaningfully”.

“We shouldn’t be surprised at all in Europe that with the political turmoil in parts of it and a consumer squeeze, particularly among the less affluent, that we should see sales [being] hard to win,” Mr Weston told the Financial Times. “It’s a difficult time to be selling consumer goods to less affluent people across Europe.”

Primark saw strong sales growth in the United States.

The group said in its food businesses, which include grocery brands such as Twinings tea, Jordans cereals and Ovaltine drinks, overall trading in the second half was in line with its expectations.

Last month, AB Foods bought the Hovis bread brand. It also said it was closing its Vivergo bioethanol plant after the UK government refused financial support.

Meanwhile shares in Inditex, the owner of Zara, jumped after a positive start to the third quarter reassured investors on the fashion retailer’s growth prospects.

Revenue jumped 9 per cent at constant exchange rates in the five weeks to September 8, the Zcompany said, faster than analysts’ estimates. That’s after sales in the six months through July lagged expectations.

The shares rose as much as 7.7 per cent in Madrid, the most since April. The stock is still down 8 per cent since the start of the year.

– Reuters/Financial Times