Associated British Foods said sales at its Primark discount fashion chain were strong over Christmas after being dampened by unseasonably warm autumn weather, helping offset a weaker-than-expected performance at its sugar unit.

AB Foods said group revenue was flat for the 16 weeks to January 4th, compared with 9 per cent growth for the year ended September 14th, with Primark’s constant-currency growth of 12 per cent helping make up for a fall of 27 per cent for sugar.

Primark, which has performed strongly through the economic downturn thanks to its low prices and quick adoption of fashion trends, saw sales in the first eight weeks of the period held back by warm weather, but reported “excellent” Christmas trade.

AB Foods reiterated its group outlook for adjusted earnings per share for 2013/14 to be similar to the previous year.

It said the operating profit margin at Primark, which generates almost a third of group sales, was better than expected and higher than in the same period last year and predicted Primark’s profit in 2014 would be well ahead of 2013.

Primark is expanding fast in continental Europe, most recently opening in France, encroaching on the territory of the world's two biggest fashion retailers, Inditex and H&M . It plans more stores this year in France, Germany and Spain.

AB Foods increased the forecast for the net new selling space Primark plans to add this year to 1.1 million square feet from 1 million. It added 0.8 million in the 2012/13 financial year, to a total of 9 million.

The sugar unit was hurt by lower European Union sugar prices, which the group expects to hit revenue and margins in Britain and Spain in the full year, while it sees more pressure from a recent fall in world sugar prices, especially in China.

The grocery unit, which includes Silver Spoon sugar, Twinings tea and Ryvita biscuits, saw sales fall 1 percent, largely as a result of a weaker Australian dollar.

Reuters