Tesco and Marks & Spencer have revealed strong Christmas sales growth, signalling robust high-street spending despite rocketing inflation and the prospect of recession.
It reflects a potentially stronger-than-expected outlook for physical stores, with both firms boosted by increased footfall following the impact of the pandemic.
The update came amid a more downbeat prospect for online rivals, many of whom have seen Covid-boosted sales growth ebb away in recent months.
Tesco revealed that UK sales grew by 7.2% over the six weeks to January 7, with growth of 4.3% over the previous quarter.
The retailer said this was supported by “continued strong growth across large stores and convenience”.
Nevertheless, chief executive Ken Murphy warned that it expects customers to slightly “tighten their belts” following Christmas and new year celebrations and cautioned over further inflation.
Meanwhile, rival Marks & Spencer said record food sales helped drive the company to a record Christmas performance.
M&S also reported that it saw clothing and home comparable store sales rise 8.6%, as the division continued its recent turnaround.
The retail firm stuck by its guidance for full-year results in spite of wider economic woes and fears over consumer spending.
It comes after the Office for National Statistics announced that food inflation hit a record 16.4% in November, while overall inflation struck 10.7% for the month, although this represented a dip from its recent peak.
AJ Bell’s Russ Mould said the latest updates on “super Thursday” for retail stocks reflected a largely positive picture.
“So far it feels like retailers are doing better than feared – with some notable exceptions,” he said.
“How far you extrapolate this resilience depends on your view of whether households have already faced the worst of the impact of mounting bills and rising interest rates.
“However, with many people still to roll off cheap fixed-term mortgage deals and further increases in the energy price cap to come, there is certainly no room for complacency.”
Meanwhile, online fashion giant Asos provided a less upbeat message to investors in its latest update.
The company revealed sliding sales in its festive quarter as it took a hit from delivery disruption and slumping consumer spending.
Asos said UK sales tumbled 8% in the four months to December 31, in stark contrast to high street rivals such as Next and M&S that have benefited from shoppers returning to stores.
Last week, Next cheered better-than-expected festive sales.
Rival John Lewis is also expected to have benefited from higher shopper numbers at high street shops but will not publish a trading update until March.
However, the John Lewis Partnership’s Waitrose supermarket chain could provide pain for the group after Kantar figures pointed towards lower sales over the last three months of 2022.
Halfords also cautioned its shareholders on Thursday, as it downgraded profit targets.
The motoring accessories and cycling retailer blamed a shortage of technicians and weak demand for tyres for a trading slowdown.