Primark owner says less wealthy shoppers will benefit from the Budget despite business hit
Unlock Editor’s Digest for free
Roula Khalaf, FT Editor, picks her favorite stories in this weekly newsletter.
The boss of Primark owner Associated British Foods predicts consumer confidence will rise among the less wealthy after Labor’s Budget but warns the group will lose “several tens of millions”. ” due to some changes.
Chief executive George Weston, whose grandfather founded the family group with brands including Ovaltine, Ryvita and Twinings tea, said “it’s hard to look at this Budget and say it’s a Budget.” good for the high street”, citing changes to national insurance and the minimum wage as well as fewer business rates reforms than expected.
Chancellor Rachel Reeves last week announced an increase in employer national insurance contributions from 1.2p to 15p and a reduction in the income threshold at which the tax comes into effect, a move that will hit the sales sector. retail, hospitality and entertainment.
Weston said “really . . . more good news for the least well-off in the Budget than bad news”, which he predicted would lead to a rise in consumer confidence and “a great Christmas” for Primarkhas 451 stores in 17 markets.
His comments were made in terms of pre-tax profits at ABFhas a market capitalization of around £17bn, which grew 43% to £1.9bn, with revenues up 2% to £20bn in the year to 14 September.
ABF shares rose 4.3% to £23.88 in morning trade on Tuesday.
Weston said the Primark value chain had achieved “good sales” and looking ahead the group was “well positioned” despite the weak sugar business.
Primark grew sales by 6% to £9.4bn a year with the high street retailer posting a 53% rise in operating profits to £1.1bn, as its collection them with singer Rita Ora and other collaborations helped offset the impact of bad weather in the UK in the second half.
ABF, which also has an agricultural division in addition to Primark and grocery, sugar and ingredients businesses, on Tuesday announced an additional £500m share buyback program and a special dividend of 27p per share.
Weston said the “changes to death duties” – following a shock cap on inheritance tax relief on agricultural properties in the Budget – “are just one more pressure on the UK farming community ”.
He added: “I don’t think government decision-makers for a while have really thought about what you need to do to maintain a viable farming community, without that it’s very difficult to maintain a good level of food security”.
