Associated British Foods (ASBFY) surged to the top of the FTSE 100 Tuesday after posting strong sales at its Primark fashion retail brand and beating analysts' expectations for full-year profits. 

Primark, which is attempting to take on fast-fashion retailers Zara and H&M (HNNMY) , saw sales rise 9% last year to £5.9 billion ($7.33 billion) in the 53 weeks ended September 17.

AB Foods said company-wide revenues for the full year rose 5% to £13.4 billion, or 4% on a constant currency basis, beating the £13.2 billion consensus provided by FactSet. Operating profit, the group said, rose 3% year-on-year to £1.1 billion. The company also said it expects to see progress in adjusted operating profit and earnings for the coming year, despite a negative impact from the fall in the pound.

Shares in the group surged more than 8% in London to change hands at a two-and-a-half month high of 2,688 pence each. Year-to-date, however, the shares have fallen by around 20%. 

Primark, which makes up the majority of the AB Foods' business, saw a 2% decrease in same-store stores due to adverse weather but was boosted by a 9% increase in retail space throughout the year, the company said.

AB Foods continued its expansion into the U.S., saying that it now has a better understanding of what appeals to American customers and are "gaining valuable insight into store locations."

"Primark now trades on attractive implied valuation of approx. 19.2x cal17E P/E, a discount to global retail peers Inditex and H&M," analysts at Liberum said in a client note. The brokerage rates AB Foods as a buy with a target price of 3,500 pence.

Zara-owner Inditex  (IDEXY) reported same-store sales growth of 11% for the first half on September 21 and H&M reported third-quarter sales were 8% higher than in the same period the year before in local currencies. Neither have reported full-year results yet.

H&M shares gained around 0.67% in Stockholm Tuesday, although, like AB Foods, have fallen around 20% year-to-date.

Inditex shares were little changed from Monday's close, trading at €31.12 each in Madrid. Its year-to-date performance, by contrast, has seen shares fall 1.6%.

For AB Foods, full year group revenues fell 1% in its sugar division to £1.8 billion and 10% in its agriculture division to £1.1 billion.

The fall in the pound "presents both benefits and challenges to the group," AB Foods CEO George Weston said in a statement. "The diversity of our operations and our broad geographical footprint, combined with a strong balance sheet, equip us well to take advantage of these opportunities as they arise."

Primark will likely see a tightening of U.K. margins as the retailer buys much of its merchandise in U.S. dollars and sells in pounds.

The company said the U.K. leaving the EU could benefit the group, especially is there is a change to U.K. agricultural policy. "The current level of sterling offers U.K. food producers significant opportunities to replace imported food and build export market," the company said.

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