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You can find the current article at its original source at https://www.theguardian.com/business/2016/sep/12/primark-vows-low-prices-brexit-votes-profits-associated-british-food-abf
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| Primark vows to keep prices low despite Brexit vote's squeeze on profits | Primark vows to keep prices low despite Brexit vote's squeeze on profits |
| (about 2 hours later) | |
| Primark’s parent company has said the fashion retailer would keep prices low despite a squeeze on profit margins caused by the pound’s fall since the EU referendum. | |
| Associated British Foods said Primark’s margins would be affected by sterling’s decline against the US dollar. The budget clothing retailer buys many of its products in dollars and a weak pound means it has to pay more for those goods. | Associated British Foods said Primark’s margins would be affected by sterling’s decline against the US dollar. The budget clothing retailer buys many of its products in dollars and a weak pound means it has to pay more for those goods. |
| ABF said the pound’s weakness had not affected Primark’s margins so far because it buys insurance against currency fluctuations when placing orders. However, it will feel the effects in its next financial year, which starts on 18 September. | ABF said the pound’s weakness had not affected Primark’s margins so far because it buys insurance against currency fluctuations when placing orders. However, it will feel the effects in its next financial year, which starts on 18 September. |
| “At current exchange rates, margin will be adversely affected in the new financial year. Primark is committed to leading the value sector of the market with its on-trend product offering and maintenance of its price leadership position in clothing,” the company said. | “At current exchange rates, margin will be adversely affected in the new financial year. Primark is committed to leading the value sector of the market with its on-trend product offering and maintenance of its price leadership position in clothing,” the company said. |
| ABF said Primark’s total sales for the 53 weeks to 17 September would be 9% higher than a year earlier stripping out currency fluctuations. But the company blamed unseasonal weather for an expected fall of 2% for sales at established stores. It said temperatures were unusually warm before Christmas and very cold in early spring. | ABF said Primark’s total sales for the 53 weeks to 17 September would be 9% higher than a year earlier stripping out currency fluctuations. But the company blamed unseasonal weather for an expected fall of 2% for sales at established stores. It said temperatures were unusually warm before Christmas and very cold in early spring. |
| Shares of ABF dropped 4.6% to £30.11 and were the second-biggest fallers in the FTSE 100 index. | Shares of ABF dropped 4.6% to £30.11 and were the second-biggest fallers in the FTSE 100 index. |
| ABF warned in April that trading was tough for Primark after the chain suffered its first half-year fall in underlying sales for 12 years. In July it said sterling’s fall would have mixed results for its overall business and that Primark’s margins would be hurt. | ABF warned in April that trading was tough for Primark after the chain suffered its first half-year fall in underlying sales for 12 years. In July it said sterling’s fall would have mixed results for its overall business and that Primark’s margins would be hurt. |
| The pound has fallen against the dollar for the past two years, dropping about 20% in that time, but the decline accelerated after the vote to leave the EU. Sterling has dropped more than 10% since the referendum on 23 June as traders expected lower interest rates and a slowing economy. | The pound has fallen against the dollar for the past two years, dropping about 20% in that time, but the decline accelerated after the vote to leave the EU. Sterling has dropped more than 10% since the referendum on 23 June as traders expected lower interest rates and a slowing economy. |
| In its trading update, ABF said overall trading for the group was ahead of its earlier expectations, helped by improved performance at its sugar business and rising profits at its grocery and food ingredients operations. | In its trading update, ABF said overall trading for the group was ahead of its earlier expectations, helped by improved performance at its sugar business and rising profits at its grocery and food ingredients operations. |
| The company said its pension deficit at year end would be £200m, compared to a small surplus last year as a result of lower bond yields. It said pension service costs next year would be higher. | The company said its pension deficit at year end would be £200m, compared to a small surplus last year as a result of lower bond yields. It said pension service costs next year would be higher. |