Primark warns of challenging times

| February 28, 2011 | 0 Comments
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Discount clothing retailer, Primark, has today warned of a slowdown in consumer spending, as Britons prepare to cut back amid rising unemployment and higher inflation.

According to Primark’s parent group, Associated British Foods (ABF), “a noticeable slowing down of UK consumer demand” is evident despite strong trading in the first three months of the financial year, which included the severe wintry weather at the end of last year.

Revenue was 11% higher, while sales at stores open for more than a year were up 3% in the three-month period - lower than the 4% expected by analysts.

Retailers such as Primark have performed strongly during the recession and have since been luring shoppers away from the more expensive retailers.

ABF also owns brands such as Twinings Tea, Ovaltine drinks, Ryvita and Kingsmill.

Primark operates 214 stores mostly in the UK, although it also trades in the Republic of Ireland, Spain, Germany, Portugal, the Netherlands and Belgium.

ABF’s comments reflect a report by the Confederation of British Industry (CBI), which last week said retailers are concerned about consumers tightening their purse strings amid rising inflation.

The CBI said retail sales are likely to be more challenging over the coming months as “prices are set to rise considerably as the VAT increase and the soaring cost of raw materials are passed on to shoppers.”

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