Budget clothing retailer Primark is expecting to trade well in the run-up to Christmas, the boss of its parent said on Tuesday.
"We think that Christmas is going to be good," George Weston, CEO of Associated British Foods, told Reuters in an interview after the group reported annual results.
He highlighted the strength of Primark's product ranges and noted "there's a little bit more consumer spending power available to our shoppers."
Mr Weston said Primark, which trades as Penneys in Ireland, had seen improved trading after AB Foods updated the market on September 5th.
In that statement, Primark had forecast like-for-like sales would be 0.5 per cent lower in its second half to September 14th. However, the outcome turned out to be up 0.5 per cent, he said.
He said trading in September and most of October was "very strong", followed by "a couple of soft weeks" as warmer weather put shoppers off buying coats and knitwear.
“We’ve never seen such a reaction to weather previously. Our shopper spends her money when she needs to, not in anticipation of needing something,” said Mr Weston.
In last week’s budget, the new Labour government raised employers’ National Insurance, or social security, contributions by 1.2 percentage points to 15 per cent from April, and also lowered the threshold for when firms start paying to £5,000 from £9,100 per year. It also raised the minimum wage for most adults by 6.7 per cent from April.
Mr Weston said the NI changes would cost Primark, which employs 40,000 in the UK, “tens of millions” of pounds, though the rise in the minimum wage was anticipated.
"We'll have to work hard to offset them, the last thing we'll do is increase our prices," he said, noting Primark's prices won't rise in the autumn/winter season.
The CEO did, however, welcome the government's focus on growth.
“If we get growth, if we get more spending power particularly in our consumers, I think that will be very helpful,” he said. - Reuters
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