Primark has 'outstanding' year but cost pressures loom

Image caption,
ABF's Primark chain has had a good year but expects high cotton prices to hurt profits

Clothing chain Primark has enjoyed a "truly outstanding year", according to its parent company Associated British Foods (ABF), but rising cotton prices are set to hit profit margins.

ABF said Primark's annual operating profits for the year to September had risen 26% to £341m.

But it warned that higher cotton prices - which have doubled - would affect Primark's profits in the near future.

But ABF said the business would absorb these higher costs to keep prices low.

ABF chief executive George Weston, whose family own 55% of ABF, said: "We will remain the price leader, there is no doubt that we will not surrender this position.

"We don't expect the cotton price to affect sales growth but it will affect the margin in the short term."

Primark has 204 stores, mostly in the UK, although it also trades in the Irish Republic, Spain, Germany, Portugal, the Netherlands and Belgium.

As well as Primark, parent company ABF owns a raft of well-known food brands, including upmarket tea business Twinings, Silver Spoon sugar, Kingsmill bread and Patak's spices.

For the year to September, ABF reported a 54% increase in pre-tax profit to £763m, with a 31% rise in operating profit to £819m.

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