Festive cheer gave high street retailers a boost in December, with a host of big names reporting better-than-expected sales.
John Lewis, Next and Shop Direct, which owns the Littlewoods and Woolworths brands, all report strong pre-Christmas spending, despite the challenging economic conditions.
Bellwether John Lewis saw its best-ever Christmas season, with a 12.7% rise in like-for-like sales to £500.8 million for the five weeks to 2 January. Fashion sales were up 22% while home goods rose 19% and electrical and home technology sales jumped 11%.
And high street staple, Next, today (5 January) raised its profit forecast after finding favour with shoppers in the run-up to Christmas. Like-for-like sales for the 22 weeks to Christmas Eve rose 3.2% - including internet trading.
Meanwhile, sales at its Next Directory home shopping business rose 6.8%, ahead of guidance of a 4% to 6% increase. The retailer says sales proved markedly stronger in the final two weeks as the weather turned colder.
The group, which runs 500 stores across the UK and Ireland, has consequently lifted its profit forecast to around £500 million for the year to 31 January - up from £429 million the previous year.
Meanwhile, Shop Direct posted a 6.3% rise in sales for the six weeks to 1 January, boosted by a 19% increase in online sales.
However, the optimism was tempered by concerns that 2010 could herald tough times.
Next warns of flat earnings in 2010. It says the effects of the public sector deficit could lead to higher levels of unemployment, increases in indirect taxation and higher interest rates, which in turn could knock consumer spending.
In a statement, it wanrs that the year ahead is not expected to be as good as the previous six months: "The scale of the public sector deficit poses a real threat to recovery. Given this level of uncertainty, we remain cautious in our outlook for the year ahead."
Mark Newton-Jones, chief executive of Shop Direct, says 2010 will "continue to be challenging in the retail sector".
But he adds: "We are confident that the customer-led changes we have made will propel the business forward.”