Penneys' chief executive says the company has no plans to increase prices for its customers as it pledges to cope with sharp increases in labour costs.
The announcement came after Associated British Foods on Tuesday announced a 10% drop in first-half profit due to losses in its sugar business, sending shares down 8% in early trading.
However, the group maintained its full-year growth forecast at “low single digits” for its Primark clothing unit, which is sold under the Penneys brand in the Republic.
Primark's expected growth will come from new store openings in continental Europe and the US, offsetting falling sales in the UK and Ireland.
Sales at Primark, led by Paul Marchant, who resigned last month over inappropriate behaviour, rose 1% to £4.5bn (€5.3bn).
George Weston, chief executive of AB Foods, told the PA news agency the company had faced a “significant” increase in labour costs but was determined to keep prices unchanged.
“We didn't change our prices for nine years until inflation forced us to review them a couple of years ago, but since then we have managed to reduce the prices of children's clothing,” he said.
“We have not changed prices and do not plan to change them in the future.
“I hope we can keep them at the current level for another eight or nine years.
“The weak US dollar and favourable cotton prices have brought some benefits, but there are rising labour costs that we have decided to offset.”
AB Foods said it expects its sugar business to make a full-year adjusted operating loss of up to £40 million, hit by the continued decline in European sugar prices, losses at its UK bioethanol business Vivergo and problems in Tanzania and South Africa.
Ireland: Penneys opens its first ever dedicated homewares store. Read more
The company said it was close to completing a review of its Spanish sugar business Azucarera and was considering mothballing or closing the Vivergo plant unless there were changes to UK bioethanol rules.
The Group continues to follow its guidance for businesses in the food, ingredients and agriculture sectors.
The company reported adjusted operating profit, its key profit measure, of £835 million for the six months ended March 1, on flat revenue of £9.5 billion in constant currency.
AB Foods shares fell 8%, erasing much of the 10% gain it has posted this year.
Sourse: breakingnews.ie
