There isn't a single charge that hasn't yet experienced inflation, and fast fashion, or the $10 jeans and t-shirts that many use to clothe their families, is one of the most recent victims of rising material, shipping, and labor costs.
Primark, the retail subsidiary of Associated British Foods () has long been associated with extremely low prices a pair of jeans can $20 while a sweater is currently selling for $12. The company, which started out in Ireland, has rapidly expanded to the United States with over 60 stores.
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These low-cost items are becoming more expensive.
Primark said it would need to raise prices to compensate for rising shipping and material costs. At 10%, the full-year operating budget is going to be lower than expectations for the first half of the year.
"In the earnings call for April 26, we will implement severe price rises across some of our autumn/winter stock."
The manufacturer did not specify how much of a price rise they anticipate on adding or what kinds of clothing would be most affected. Next NEXT, a British fast fashion company, had earlier averaged 5.5 percent for fashion and 13% for homeware items.
"We will absolutely ensure that we are the best value available, but that's not going to change," says Primark's head of finance, Reuters.
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Primark was not considering imposing the increases for the current spring/summer stock, but said it did not speculate on whether or not all of the autumn/winter stock will be affected.
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The reason for the increases has a lot to do with rising inflation prices per capita rose by 7.1 percent in March, whereas many of the equipment that used to make clothes and home furnishings were even more susceptible to hikes.
According to data from the Labor Department, apparel and footwear costs increased by 6.7 percent from last year.
This can be a difficult situation for consumers, particularly those who already depend on the cheapest available food or clothing to make ends meet. Stores which offer the lowest option have experienced the most dramatic price rises.
Grocery prices at dollar stores are up 14.3% from 2021 to 22.5% from 2020, while revenue at Family Dollar and Dollar General () have increased a respective 20% and 28.2% since January, according to Dollar Tree. Despite the fact that their dollar is less prevalent in the US, many people are reluctant to pay attention.
As such increases are striking the industry quite often, it is unlikely that price rises will affect Primark's sales by much as it remains one of the country's cheapest clothing options. That said, ABF stock has risen by almost 8% following the earnings call.
"Primark will have to deal with higher costs, for example in cotton and energy, while keeping its commitment to not raise costs," Andrea Felsted of Bloomberg. "[...] It also risks being caught in other crosshairs, from the rise of Shein Group Inc., which makes even faster fashion, to increased environmental awareness, which might see young people turn away from more disposable clothes."
