street bellwether Marks & Spencer is this week expected to report its first sales growth in two years, boosting hopes that British consumers have cast aside their gloom and started spending again.
The retail giant will update the market on Wednesday on how it fared over Christmas, with analysts expecting M&S to post like-for-like sales growth of around one per cent – a massive improvement on last year’s steep 7.1 per cent drop when consumers were in the grip of recession.
The apparent improvement in con- sumer confidence is backed up by figures from card payment processor Barclaycard Payment Acceptance, which showed sales were up 2.4 per cent on 2008 over December’s final fortnight.
But the British Retail Consortium has warned consumer spending may hit the skids again in 2010, with tough trading ahead and VAT hiked.
Spokesman Richard Dodd said: "It has clearly been a better December than last year, when total sales were down 3.3 per cent. This Christmas is not going to have been a bonanza by any means, but consumer confidence has improved."
"There are still some big clouds on the horizon for 2010 so even if there- are good results for December, that doesn’t mean all our problems are behind us. There is the threat of rising unemployment, tax increases, and rising housing costs, which are big factors that curtail spending," he said.
M&S will follow positive reports from other spending barometers, such as John Lewis and Waitrose, which have also posted strong Christmas results.
Ocado, the online food retailer, saw a 30 per cent leap in underlying sales in the four weeks to 26 December. The company, which is considering a stock market flotation, saw sales of £41m, with a 49 per cent leap in sales in the Christmas week. Meanwhile, Selfridges is expected to report a 16 per cent increase in sales over December, compared to 2008, and John Lewis reported a 24 per cent rise in Christmas Eve sales.
Analysts will be looking to further positive news from the slew of retailers due to update the market this month including Next, J Sainsbury and Debenhams.
Barclaycard Payment Acceptance, which processes credit and debit card transactions for 88,000 UK retailers, said consumers spent £4.09bn on their cards between 19 and 31 December, up from £3.99bn in 2008. The busiest day was 23 December, when £497m was spent on last- minute Christmas shopping.
Don Williams, head of retail at BDO LLP added: "Homewares have traded particularly strongly as shoppers invest in big ticket purchases before the VAT rise."