AB Foods says warm weather stalled Primark's Christmas sales

By Sarah Young

LONDON (Reuters) - Associated British Foods (ABF.L) said on Thursday unusually warm winter weather meant sales at its Primark discount fashion chain stalled in the nine weeks to Jan. 2, a drop shrugged off by the fast-growing retailer as a temporary blip.

Britons avoided buying winter clothes during some of the country's mildest November and December temperatures, with retailers Next Plc (NXT.L) and Marks and Spencer Group (MKS.L) blaming the weather for disappointing sales before Christmas.

Primark sold fewer coats, hats, scarves and thermal clothes, causing sales at shops open more than a year to fall in the nine weeks to Jan. 2 compared with the same period the year before.

Shares in AB Foods, which also has major sugar, grocery, agriculture and ingredients divisions, traded down 0.8 percent to 3,020 pence at 0856 GMT. Since hitting an all-time high in early December, the stock has lost 16 percent on concerns about the impact of the weather.

But the picture for the 16-week period to Jan. 2 was mixed, with Primark saying it posted "strong" like-for-like sales growth in the first seven weeks.

AB Foods finance director John Bason said the weaker pre-Christmas performance was nothing to worry about.

"Footfall was fine ... It's specific to those weather related items," he told Reuters. "We'll move on from that."

On a total sales and constant currency basis, Primark's sales climbed 7 percent over the 16 week period, in line with the increase in selling space from new shops, including in the United States and Spain.

Primark plans to open six more stores in the United States this year and will also open its first outlet in Italy in the summer, building on its portfolio of 299 shops, of which 166 are in Britain.

For its 2015/16 financial year, AB Foods stuck with its current forecast for a modest decline in adjusted operating profit, brought about by currency pressures.

The group on Thursday also reiterated expectations for an improvement in sugar profits in 2017.

(Editing by Paul Sandle and Mark Potter)