Surging Primark sales lift AB Foods

AB Foods Finance Director John Bason said sales at Primark stores open at least a year rose 9 percent over the past six months, in contrast to declines reported recently by mid-market rivals such as Marks Spencer and Next.

The recession, as well as better weather compared with last year's summer washout, helped to fuel demand, he said. But Bason claimed there was also an underlying shift towards buying cheaper clothes that would continue beyond the downturn.

"There's a real change in people's shopping habits, and certainly among ... 20 to 30 year old females, it's a change for good," he told Reuters in a telephone interview, reporting particularly strong sales of footwear and summer dresses.

Primark's underlying sales growth, which AB Foods expects to be 7 percent over the year to September 12, also outstripped international rivals, helped by the strength of its UK market.

Sweden's Hennes & Mauritz reported a 3 percent drop in underlying sales in July on the same month last year, following a 5 percent decline in June. Europe's biggest fashion retailer Inditex posts first-half results on September 16.

"Tremendous," Shore capital analyst Clive Black said of Primark's sales growth, putting his "hold" rating on AB Foods' shares under review for a possible upgrade.

Shares in AB Foods, which also markets Silver Spoon sugar, Twining tea and Ovaltine drinks, climbed as much as 5.8 percent to a 14-month high of 859.5 pence in early trade.

At 8:40 a.m. the stock, which has outperformed the DJ Stoxx European food and retail stocks indices by 11 and 3 percent respectively this year, was up 3.6 percent at 841 pence, valuing the London-listed firm at 6.5 billion pounds.

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