Primark owner AB Foods sees strong sales

Primark store
Image caption The group opened nine new Primark stores in Europe in the run-up to Christmas

Associated British Foods has reported a 12% rise in total sales in the 16 weeks to 7 January, thanks to "exceptional" performances at its sugar division and at discount fashion chain Primark.

The group, which sells Silver Spoon sugar, said higher prices and higher production levels meant that total revenues from sugar rose 21%.

Revenues at Primark increased by 16%.

However, it added that the operating margin at Primark was lower than a year ago because of higher cotton costs.

But it also noted that cotton prices had fallen from their high point last year and said it would begin to see the benefit of that in the second half of its financial year.

AB Foods opened nine new Primark stores in Europe over the trading period, including two in the UK, as well as two concessions in Selfridges stores in Birmingham and Manchester.

The group said that sales growth at stores open for more than a year was good, but did not give an exact figure.

Looking ahead, AB Foods said: "We expect growth in sales and adjusted operating profit in the coming year, with the improvement weighted towards the second half."

Keith Bowman, equity analyst at Hargreaves Lansdown Stockbrokers, said the company had delivered "a reassuring if somewhat unexciting update".

"The group continues to benefit from its diverse nature, with solid trading for both its sugar and retail businesses offsetting more sedate performances for grocery and ingredients. In addition, both commodity and currency volatility continue to buffet the company," he said.

Low confidence

Meanwhile, online fashion retailer Asos also reported a strong third quarter.

Total sales in the UK rose 10% in the three months to 31 December, while international sales rose 93%.

Luxury fashion brand Mulberry, which makes handbags and other leather goods, said like-for-like sales for the 16 weeks to 14 January increased by 25%.

The company said the success of the festive period meant its results for the full financial year would exceed its earlier expectations.

Separately, the Nationwide Building Society said that consumer confidence in the UK had been "at a low ebb" in December, blaming the rising cost of living and the eurozone debt crisis.

Its Consumer Confidence Index fell to 38 last month from 40 in November, although it was still above October's record low of 36.

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