British retailer Primark plans to raise prices as rising inflation puts a squeeze on its profit margins.
While the low-price retailer foresees rising costs to impact its performance, it still expects to reach a profit margin of 10% for the full year. The company reported a profit margin of 11.7% in the first half of the year.
“The most important thing is that we will remain the most competitive, best priced clothing retailer on the high street or online,” said Chief Executive Officer George Weston in an interview.
“We obsess about price.”
In response, the retailer plans to selectively increase price points across its Autumn/Winter stock starting in August, parent company, Associated British Foods, said.
The company’s decision to hike rates comes at a time when the global apparel industry is facing challenges with protecting margins amidst supply chain challenges and tightening household budgets.
“This is the highest inflation rate in 30 or 40 years, depending on what article you’re reading,” Weston said, adding that the planned price hike will be the first time in “quite a long time” the retailer has had to make such a move.
Primark, for one, has been particularly hit hard as it lacks an eCommerce business and has remained reliant on in-store sales throughout the pandemic.
Earlier this year, the retailer announced plans to cut 400 jobs to tackle rising costs.