Primark's owner has issued a profit warning as soaring energy costs ramp up the budget retailer's bills on air conditioning, heating and electricity by around £100m.
John Bason, the long-running finance chief of Primark owner Associated British Foods (ABF), said energy bills for running Primark’s 400 shops typically rise by about £10m on an average year. This year, however, they are set to soar by £100m as the UK faces a major energy bills crisis.
Mr Bason told The Telegraph that the fashion brand was looking at ways to reduce costs in its shops, such as trying to fit the stores with more LED lightbulbs. It is not reducing opening hours.
His comments came after ABF surprised investors on Thursday by warning that Primark’s profits next year would be lower than expected due to soaring costs and the weakening pound, although sales and profit in the current year are on track.
It said it would not increase prices next year despite the US dollar strengthening "significantly against sterling and the euro and energy costs remain volatile and higher".
The announcement came hours before Liz Truss announced that she is rolling out a new “Energy Price Guarantee” which will save a typical household £1,000 a year and mean that the typical household will pay no more than £2,500 per year.
However, Mr Bason said that regardless of the Government support for businesses' energy bills the falling value of the pound is "a big one" for the business, which buys most of its clothing stock in dollars. The pound sank to its lowest level since 1985 this week amid concern about the Bank of England's commitment to fighting inflation and Truss's plans for a borrowing spree.
Shares in ABF dropped 8pc following its statement to investors on Thursday morning. Rivals such as B&M and Next also dropped in a sign that investors are spooked about retail stocks.