Sainsbury's and Debenhams Hint High Street Rebound

Sainsbury's and Debenhams have both announced strong trading statements, raising hopes that consumer confidence is on the rebound.

The results will likely be positively received by George Osborne in the lead-up to the Budget, hinting towards an atmosphere of a strong consumer economy, which he will be keen to foster.

Excluding fuel, Sainsbury's group announced a 2.6 percent increase in like-for-like sales in its fourth quarter, giving a 2.1 percent increase for the year to 17 March.

Debenhams also profited from a strong January sale period to lift like-for-like sales by 0.3 percent in the first half, including a 2.4 percent increase in the eight weeks to 3 March.

Both chief executives praised their companies' performances in a period of austerity, hinting that customers are starting to feel more comfortable with spending.

Sainsbury's chief executive Justin King said the statement represented "a good performance for the year against a challenging backdrop".

He highlighted the company's own label ranges and the Nectar points system for its strong showing.

"We have invested over £85m this year to make our fresh food better than ever and this is delivering real results," he said.

"The economic climate in likely to remain challenging and we are committed to helping customers make their money go as far as possible."

Sainsbury's, the third largest supermarket after Tesco and Asda, opened 19 new stores and 73 convenience stores in the past year.

In a sign that customers are still watching their budgets, sales of Sainsbury's Basics range grew by 10 percent, alongside a 20 percent increase in sales for its Taste the Difference brand.

Michael Sharp, chief executive of Debenhams, said he was pleased with its performance, claiming it would continue its strategy of focusing on UK retail, spreading the brand internationally and multi-channel sales.

Online sales also performed well, with a 35 percent increase, a significant step ahead of the 16 percent increase in the UK's e-commerce as a whole.

"Whilst it is prudent to remain cautious about the health of the wider economy and the impact this may have on consumer behaviour in the short-term, we remain comfortable with the outlook for the full year," Sharp said. "Over the medium term, we are confident of the benefits that our strategy will bring to Debenhams."

A spokesperson for the British Retail Consortium said: "Although we are seeing what appears to be some slow increases in consumer confidence, there is a long way to go and it's certainly not a quick fix. The underlying problems of low levels of disposable income and high street business rates must be tackled in the Budget."