Primark set for Christmas as pricing strategy pays off

LONDON, Nov 11 (Reuters): British fashion retailer Primark is heading into Christmas in good shape and with trading momentum after its strategy of passing on only limited price rises kept shoppers on its side.

It signalled the retailer's margin in the new financial year would also benefit from lower material and freight costs.

In its 2022/23 year, Primark's sales rose 17 per cent, helped by a decision to pass on only part of the input cost increases it faced to consumers through higher prices.

AB Foods CEO George Weston said Primark had raised "a few" prices in some of Primark's autumn/winter ranges, but lowered them in childrenswear.

"We have no plans to move any prices through the rest of the year," he told Reuters in an interview.

Echoing comments of rival Next last week, Weston said Primark's trading had been strong since the return of autumnal weather in mid-October.

He said shopping for Christmas lines had started early, as consumers spread the cost over more than one pay packet.

Weston expects further growth in Primark's sales in the 2023/24 year, driven by some 1 million square feet of new retail space and "modest" levels of like-for-like sales growth.

Lower material and freight costs should result in a "substantial recovery" in Primark's gross margin and overall it expects Primark's adjusted operating profit margin to recover to over 10 per cent from 8.2 per cent in 2022/23.