Primark owner AB Foods maintains guidance after quarterly sales rise

United Kingdom stocks were trading lower on Thursday as the pound held steady after recent run-up and shares of Primark chain operator Associated British Foods fell after forecasting weaker-than-anticipated outlook for its sugar division.

Associated British Foods tumbled 2.7 percent after a mixed Christmas trading update.

This is despite more evidence that Primark's cut-price fashion offer continues to hit home with British shoppers, with a record trading performance in the week before Christmas.

Sales in the U.S. also reportedly made progress. AB Foods made 223 million pounds from sugar in 2016-17.

However, the firm said it was still on track to boost operating profits and earnings at year end, with group revenues for the 16-week period to January 6 rising 4% at constant currency.

It marks a short-lived recovery for the sugar division, which reported a substantial rise in annual profits in November. This had been bolstered by good sales growth of its Twinings and Ovaltine tea brands. The company said that Primark's sales growth across Europe was held back by unseasonably warm weather in October but that trading in the five weeks leading up to Christmas was robust.

In November AB Foods had cautioned that in sugar, higher volumes and lower costs would only partially mitigate the effect of much lower European Union prices.

They expressed concern at Primark's lack of a transactional online offer and the time it will take to reach critical mass in the United States, where it lacks brand recognition.

Primark owner Associated British Foods (ABF) achieved "record" retail sales in the week before Christmas with strong growth in the United Kingdom, but shares in the firm have fallen on a weaker than expected outlook for its sugar division.

This reflected a "strong" like-for-like sales performance in the United Kingdom and continued store expansion.

Primark has 350 stores with 14.2m square feet of space, and expects to open 1.2m square feet of space this year.