Cheap clothes still in vogue in Britain as Primark’s sales rise

Bloomberg

Britain’s biggest discount-clothing chain expects the effects of June’s Brexit vote to start feeding through to apparel prices later this year, though it won’t be the first to act.
The owner of the Primark chain made the prediction on Monday as it reported an increase in UK same-store sales for the first half of the financial year.
“Pricing in the market will move, but we’ll probably see it later this year,” John Bason, chief financial officer of Associated British Foods Plc, said in a phone interview. Not much has changed yet, he said, adding that Primark is “committed to being the best value on the high street.”
Currency hedging means most retailers have so far been able to avoid raising prices to mitigate the increased cost of imported products caused by the drop in sterling. With their expenses already under pressure from a new minimum wage and higher commercial property taxes, most will have little option but to charge higher prices.
Primark has seen little change in consumers’ behavior since Christmas, said Bason. The resilience in consumer spending wrong-footed many economists in the wake of the Brexit vote.
Primark’s U.K. same-store sales are expected to rise 2 percent in the first half of the financial year, AB Foods said Monday. The chain is taking market share in its home market and its expansion plans are “very much intact,” Bason said.
AB Foods shares fell 0.6 percent to 2,596 pence at 10 a.m. in London. The company, which also owns British Sugar, reiterated it expects progress in full-year adjusted operating profit and adjusted earnings per share.