The Dip

Discount fashion chain Primark has admitted it is struggling with higher costs and supply chain issues as it recovers from The Effects of the coronavirus pandemic.

Store closures during lockdowns hit the retailer's annual sales, down by 12% on pre-Covid levels.

Its parent firm, AB Foods, said Primark had lost one-third of its trading days in the 53 weeks to 18 September.

But it added that it expected higher profits in the new financial year.

Unlike most High Street retailers, Primark has no online retail operations.

AB Foods said its adjusted pre-tax profits had fallen by 1% to £908m for the year, with The Dip in sales at Primark offset by " strong" sales in its food business.

The Firm 's chairman, Michael McLintock, said sales and profit were again below pre-Covid levels, but praised the " agility" of Primark's management in responding to " the fast-changing and wide range of trading restrictions applied to our stores over the year".

" The strength of Primark's sales after the reopening of all our stores in The Spring demonstrated the relevance and appeal of our value-for-money offering, " he added.

The pandemic has proved costly for Primark. It lost £2bn in sales Last Year when its stores had to close. A third of its trading days were lost. But it's weathered The Storm .

All things being equal, it now hopes to More Than Make Up The Lost ground, assuming trading comes Back To normal next year. And it has Big Plans for international expansion, with new stores in the US, France, Italy and Spain over The Next five years.

But Primark's having to paddle hard to mitigate all the cost pressures now building up. Although AB Foods' food business is putting prices up where necessary, passing costs on to shoppers is less easy to do at its fast-fashion chain.

Primark says thanks to the weaker dollar and The Steps it's taken to lower store costs, it hopes to broadly offset all The Rising supply chain costs and inflationary pressures bearing down on the industry.

Mr McLintock said AB Foods - which, as well as running Primark, also owns food brands such as Twinings, Ovaltine and Patak's - was seeing " significant cost increases in energy, logistics and commodities, in addition to the impact of widely reported port congestion and road freight limitations".

" Our businesses are working to offset the impact of these through cost savings. Where necessary, our food businesses will also implement price increases, " he added.

AB Foods chief executive George Weston said Primark had " delivered a good performance in The Face of continued disruption to trading caused by the pandemic".

" Although the possibility of further trading restrictions cannot be ruled out, we expect Primark to deliver a much-improved margin and profit next year, " he added.

Source of news: bbc.com