The Business Times

Primark owner plans £500m buyback amid falling profit

Published Tue, Nov 8, 2022 · 04:46 PM

The owner of the Primark budget fashion chain unveiled a plan for a fresh £500 million (S$805.3 million) share buyback and warned of “substantial and volatile” cost inflation in the current fiscal year.

Associated British Foods, which also owns sugar, agriculture and ingredients divisions, said it will buy back the shares this financial year and raised the dividend by 8 per cent. The business expects profit to be lower this year than last and said it will make attempts to recover costs “in the most appropriate way.”

The company’s stock rose 4 per cent in early trading in London. 

AB Foods warned in September that profit will fall as rising energy costs and the strengthening of the dollar weigh on Primark. The UK conglomerate draws most of its profit from the fast-fashion value chain which buys the bulk of its clothing in US dollars and is struggling to pass on rising costs to cash-strapped consumers.

Despite surging inflation, which pushed up costs across the group by £1 billion last year, AB Foods said it planned to “stand by” its customers and would not raise prices further at Primark than it already has done. The company is working to remove costs from the business and last year cut some jobs to help offset the supply chain disruption and effects of the highest inflation in four decades. 

Primark shoppers are putting fewer items in their baskets and buying clothes “as and when they need them, not in anticipation,” AB Foods chief executive officer George Weston said in a phone interview. “There are lots of signs of people being short of money.”


Start and end each day with the latest news stories and analyses delivered straight to your inbox.


British consumers are increasingly pulling back on non-essential purchases as real incomes decline and prices in shops rise by the highest since at least 2005. Online clothing chain Boohoo Group and high street bellwether Next both issued profit warnings in September while Asos is restructuring its business.

Primark suffered during Covid lockdowns as stores closed for months and it lacks an e-commerce site to fall back on although it is due to start a click-and-collect trial on children’s products. It is also improving its website to allow customers to check stock availability of items in stores while still not transacting online. 

AB Foods is undergoing management changes as Eoin Tonge, chief financial and strategy officer at Marks & Spencer Group, will replace John Bason who will be retiring as finance director. Bason, who has worked at AB Foods for 23 years, will become a senior adviser to Primark and chairman of a newly constituted strategic advisory board for the retailer. BLOOMBERG



BT is now on Telegram!

For daily updates on weekdays and specially selected content for the weekend. Subscribe to

Consumer & Healthcare


Get the latest coverage and full access to all BT premium content.


Browse corporate subscription here