Higher spending at discount clothes stores Penneys and Primark drove sales at the retailer's parent company, Associated British Foods (ABF), in the first quarter of its fiscal year, pushing its share price to its highest growth level since March 2000.

Sales climbed 13 per cent in the in the 16 weeks to January 5th, ABF said in a statement. Sales at the 173 Primark stores, including its 38 stores in the Republic, which trade as Penneys, were 26 per cent ahead. This reflected stronger trading over Christmas, which beat managers' expectations, and an increase in shop space.

Shares in ABF rose by as much as 9.6 per cent, its highest increase in almost eight years.

London-listed ABF has doubled Primark's floor space in two years after the company bought the 120 stores in the Littlewoods chain in the UK in 2005. It converted a third of the stores into Primark branches and sold the rest.

Primark and Penneys are managed from Dublin by veteran retailer Arthur Ryan, who founded the clothing chain.

The company said it had recently opened a new store in Cork and a larger store in Tralee. It has also opened stores in Jerez and Madrid, bringing the number of stores in Spain to four, and it is planning to open a further four stores there in April.

The chain is still relying on low prices to drive sales as rising mortgage payments and household bills put pressure on incomes.

Revenue in ABF's agriculture division increased by 20 per cent, ingredients sales surged 16 per cent and grocery revenue rose 15 per cent, with strong sales growth at Twinings and Ovaltine and continued improvement from Allied Bakeries.

Sugar revenues fell 12 per cent and the company expects lower profits from sugar in the UK.

ABF shares closed 8.1 per cent higher yesterday at 838p.