Both Tesco and Marks & Spencer (M&S) have reported better-than-expected sales during the crucial Christmas trading season, driven by strong demand for festive treats.

Tesco has raised its profit forecast for the full year, citing robust sales boosted by strong demand for fresh goods and its premium Finest range. The supermarket saw a 6.8% increase in UK sales over the six weeks to January 6. Sales volumes also experienced growth, and the Finest range witnessed a nearly 17% surge in sales during the Christmas period. Tesco responded to competitive pressures by reducing prices on nearly 2,700 products.

M&S reported a solid demand during the festive season, with an 8.1% rise in overall sales over the 13 weeks to December 30. Food sales increased by 9.9%, while clothing and home sections experienced a 4.8% rise. However, the retail giant warned of an uncertain outlook for the coming year, citing consumer and geopolitical risks, as well as additional cost increases due to wage and business rate inflation.

Despite the positive sales figures, shares in M&S fell over 5% in early trade. Tesco, on the other hand, expects its retail operating profits to reach £2.75bn for the full year, surpassing its previous guidance range of £2.6bn to £2.7bn. Tesco's CEO, Ken Murphy, expressed cautious optimism about consumer spending, citing falling mortgage rates and growing wages in a full employment market. Photo by J Taylor / Tesco Supermarket, Osterley, London. / CC BY-SA 2.0, Wikimedia commons.