There was better news for the embattled high street today as figures revealed stronger Christmas sales than 2010, boosted by results from Marks & Spencer (M&S).

The retail giant saw like-for-like sales increase 0.5 per cent on 2010, with a 1.8 per cent decline in general merchandise and a 3 per cent rise in food. Analysts had been forecasting a 1.5 per cent drop and 1.5 per cent rise respectively.

British Retail Consortium (BRC) figures revealed overall UK like-for- like retail sales volumes had increased by 2.2 per cent over 2010 thanks mainly to a ‘dazzling’ pre-Christmas week.

Stephen Robertson, director general of the BRC, praised the ‘better than hoped-for December’ but warned that ‘with discounting driving sales at the expense of margins the key question for retailers is about earnings from those sales’.

Vicky Redwood, chief UK economist at Capital Economics, acknowledged that the figures had significantly beaten expectations, but warned of a number of caveats.

She said, ‘For a start, shoppers were to some extent simply making up for a sluggish start to the festive shopping season. The BRC’s measure of sales growth in October and November had been negative.

‘What’s more, sales enjoyed a favourable comparison with last year, when shopping was disrupted by the snow. Retailers also had to discount aggressively to get these results.

‘Not only does this mean that retailers’ margins will have suffered, but it could suggest that the bounce in demand is based on fairly unsustainable foundations.’

Shares in M&S were up 2.27 per cent at 315.5p in early trading as investors reacted positively to the sales figures, despite profit margin warnings.

The firm has warned that gross margins will be lower in 2012 due to planned promotions in general merchandise, but it claimed ‘tight management’ and additional savings would be made to preserve profit forecasts.