Corporate Tax

Penneys proprietor prepares for Eire’s corporate tax modifications

Penneys owner Associated British Foods predicts a significant increase in sales and profits for its fashion chain in the new fiscal year after 2020-21 performance was impacted by store closures due to the pandemic.

Penneys, operating as Primark outside of Ireland, expects sales to drop by at least an estimated $ 2 billion and profits declined 5% and 11% respectively over the 2020-21 period.

“Primark is not immune to supply chain challenges, raw material costs and wage rate inflation. However, we currently anticipate the impact of this in transactional currency gains from the weaker US dollar, improved store work efficiency and lower operating costs, “said AB Foods.

“Looking ahead to next year, we expect upward pressure on the effective tax rate due to the impact of corporate tax increases, particularly the increase decided in the UK and the recently announced increase in Ireland.”

The group, which also runs large sugar, food, ingredients and agricultural operations, said it saw significant cost increases in energy, logistics and raw materials in addition to the effects of port congestion and restrictions on road freight transport.

Work is being done to offset the impact with cost savings.

If necessary, the grocery stores will also carry out price increases, it said.

For the 53 weeks to September 18, the group posted adjusted operating profit of £ 1.01 billion (€ 1.18 billion), both down 1%. It predicts “significant progress” in both measures for 2021-22.

It will also pay a special dividend after its balance sheet and cash flow recover from the pandemic hiatus.

Additional reporting by Reuters

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