Marks & Spencer, Britain's most profitable retailer, presented further proof yesterday of a stronger-than-expected Christmas for high street stores. In the five weeks before the New Year it sold 10.8pc more in the UK than in the same period of 1993, it said.
The announcement coincided with news from Burton, the clothing retailer behind stores such as Dorothy Perkins and Evans, that its sales rose just 0.1pc in the 20 weeks to last Saturday.
Analysts said last night that retailers' recent trading statements suggest overall growth of over 5pc in Christmas sales, echoing figures last week saying takings rose 6.5pc in December to a record £4 billion a week.
The positive news from Marks & Spencer was tempered by a warning that trading both at home and overseas remains "extremely competitive", sending the group's shares down 31/2p to 3741/2p.
In the last three months of 1994, Marks & Spencer's UK stores boosted sales by £120m, or 6.7pc,
above the year before, despite fears about the impact of an exceptionally mild autumn on its clothing business.
Clothing and food sales grew at broadly the same rate, surprising some analysts who had expected a bias towards clothing, where profit margins are higher than in food or gifts. But the companystressed that it traded at the same margin as last year, and experienced "minimal price inflation".
The introduction of a "better values campaign" in Europe, cutting prices by an average 15pc to boost volume, is achieving its aim, but has hit margins and, exacerbated by higher spending on store expansion and infrastructure, dented European profitability for the period.
Mark Josefson, retail analyst at brokers Panmure Gordon, said: "The better values campaign was tried here over two years ago and long-term there should be very little impact on gross margins."
In the United States, the Kings Super Markets chain performed well, but the Brooks Brothers menswear stores "performed poorly".
Burton chairman Sir John Hoskyns told the group's annual meeting yesterday that a shift to prime quality ranges helped it push gross profit margins up by a cumulative 3.7pc in the past 20 weeks, but sales rose just 0.1pc across the group.
The 4.3pc improvement in sales at Debenhams was almost entirely offset by a 4.2pc fall in sales at multiples such as the Burton Menswear chain and Principles, Sir John said.
