Marks & Spencer chief executive Marc Bolland does not expect consumer demand to fall off a cliff this year, despite an expected squeeze on income and economic uncertainty.

During Bolland’s first Christmas at the helm, M&S emerged as one of the season’s winners after like-for-likes - flattered by the inclusion of part of the Sale in the third quarter - rose 2.8%. Bolland said that customer behaviour was “rational” during the key selling period and maintained: “We don’t expect people to hold back now.”

The retailer lost sales of about £50m because of snow disruption but took share in its key categories of fashion and food. Bolland said that customers proved willing to trade up in clothing but the retailer will retain keen opening price points and hold prices where possible.

In food, the retailer delivered its biggest ever day on December 23, when sales were more than £50m.

Bolland insisted that although he would be competitive on staple items and branded food, he would not mirror the price-cutting offensives of the big supermarkets.

Oriel analyst Eithne O’Leary said that M&S’s emphasis on quality and innovation had paid off and observed: “M&S’s buyers are on trend at the moment and we expect this to continue into 2011.”

Arden analyst Nick Bubb was disappointed that the performance was not good enough to lead to upgrades. He said: “Marc Bolland is lucky that he has inherited a brand with good momentum and good market positioning.”

Credit Suisse analyst Tony Shiret said: “In some ways the new trading strategies of accelerating product newness and better focus on fewer, more decisive promotional interventions are merely a more effective way of delivering what the former management team has been trying for a few years.”

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