Penneys owner warns of lower profit next year

Associated British Foods warned of lower profit next year, as its Penneys/Primark fashion business struggles with rising costs and as surging inflation hammers the disposable incomes of British consumers.

ABF said soaring energy bills and its decision to limit further price hikes would hurt fashion chain Penneys — known outside Ireland as Primark — and its margins next year.

Consumers have been tightening their purse strings with inflation surpassing 10 per cent in July in the UK and topping 9 per cent in Ireland. The rising costs of everything from food to fuel show no sign of abating. ABF said it would consider in November whether or not it had surplus cash to return to shareholders this year.

The company retained its outlook for the current year, ending September 17th, with its food business seeing stronger revenue due to higher demand and prices of ingredients. - Reuters