Price cuts hit margins at Penneys owner

The owner of the discount fashion chain Penneys today said it was having to discount more than expected as it battles the harsh consumer climate.

Associated British Foods, which also owns Primark, Twinings, Ovaltine and Kingsmill, said the budget retailer’s like-for-like sales rose by 3% in the year to September 17 but that it needed a higher than normal level of price cuts to get customers spending. This will hit operating margins by more than anticipated.