Spenders are bouncing back

in recent years.

Sales are up across a variety of product areas from household goods to

clothing and many retailers are noting a particularly strong recovery in

sales in London and south east England.

There is a trend towards retailers making formal trading statements in

January. This gives investors an update on the vital Christmas and

January sale period.

With the exception of Dixons, which has the special factor of a

computer price war to deal with, the news from the High Street has been

exceptionally good underlining the strength of the recovery in the

domestic economy. Boots announced a sales increase of 7.2% in the three

months to end-December with notably strong trading in Halfords and

Childrens World.

Yesterday, Storehouse, the BhS and Mothercare group and Laura Ashley

both reported that trading was strong. Storehouse said that for the

third year in succession it had had a highly successful Christmas

trading season and that sales post Christmas were ahead of last year's

exceptional levels.

In the six weeks from mid November up to Christmas, sales across the

group were 13% ahead of last year with BhS, Mothercare and the menswear

chain Blazer all achieving sales increases over the period. Sales in the

BhS Christams shop of children's clothing and of lingerie were said to

be particularly encouraging.

The marketplace remains highly competitive and as such did not grow to

the same extent as sales, held back by additional promotional activity.

However profitability was said to be in line with expectations. In the

year to date sales are said to be ahead of the 5% increase reported at

the time of the interim results in November.

Womenswear is very susceptible to changes in fashion and as such

throughout the recession demand has proved to be more resilient than for

other items such as menswear. In the eight weeks to December 25, sales

in Laura Ashley were in line with the company's expectations. There was

a robust performance from the UK and Ireland with sales up 17.6% with

very little discounting.

There was similar growth in north American sales albeit from a low

base in the previous year caused by merchandise and management

difficulties.

The continued deep recession in Continental Europe led to a 2.5%

decline in underlying sales although the company believes that was a

creditable performance in the circumstances. New shops opened in the

last 12 months were all said to have performed well over the Christmas

period. Better stock control means that there was little residual

merchandise for the January sales but even so trading has been strong.

Jacques Vert, the mid-market women's fashionwear group, has record

order levels for its Spring/Summer collection and profits in the first

six months of the year showed jumped by 48% to #833,000.

The interim dividend was raised to 1.5p from 1p as earnings per share

improved to 4.8p from 4.2p. Borrowings during the period more than

halved to #1.7m from #3.9m. Commenting on the results joint chairmen

Alan Green and Jack Cynamon said ''the retail climate which, prior to

the Budget, appeared somewhat gloomy, has begun to show signs of

improving''.

Although sales are expected to have improved for retailers in general

it is the ability to hold up gross margins which is the key criteria for

profits growth. In this respect the likes of Marks & Spencer and

Kingfisher with market leadership and strong sales can be expected to

report healthy profits growth.

Whilst everything in the retail garden appears rosy at the moment

there are some clouds on the horizon, not least tax increases due to

come into effect in April. These will undoutedly cause a sizeable dent

in many households' income and as such can be expected to have an

adverse impact on consumer spending. The Government may seek to offset

this by a further reduction in UK interest rates.

Since the budget the stores sector as a whole has had a strong run

although from time to time concerns resurface about the sustainability

of sales growth.

Some retail shares that are expected to continue to offer attractions

are Next and Storehouse, both having recovered from dire financial

situations. In the current year Storehouse is forecast to make profits

of around #68m compared with #46.6m previously whilst Next should make

taxable profits of #68m compared with #36.2m previously. New store

openings should boost sales at both groups for the forseeable future.

There was some profit-taking in the retail sector and Storehouse

shares were 3p cheaper at 239p after earlier touching a 12 month high

of 253p. Laura Ashley gained 7p to 85p, Next were 5[1/2]p lower at 224p

and Jacques Vert dropped 6p to 200p.