James Thompson: Story of tribulations is a sign of how tough things really are

For those who over indulged at Christmas, January is often the time when people vow to eat healthier, sign up to a gym or take a seat in the doctor's waiting room – if they have really overdone it.

In a similar way, the retail sector goes through its own very public health check early in the new year, when high street stalwarts and online specialists post their festive trading statements.

The diagnosis was particularly illuminating this year at a time of a brutal squeeze on consumer spending – which shows no sign of abating with those dreaded credit card bills set to land next week.

Certainly, insolvency surgeons were busy treating terminal patients, such as the fashion chain D2 Jeans, the shoe group Barratts Priceless and the toy specialist Hawkin's Bazaar, although other sickly characters, such as the outdoor retailer Blacks Leisure, were allowed out of intensive care with new owners.

But Christmas 2011 will probably be remembered for just one company – Tesco.

When the UK's biggest retailer, which has grown its profits and sales remorselessly for more than a quarter of a century, warns of "straining" profitability, everyone truly knows how tough life is on the high street.

The almost historic profit warning from Tesco seemingly gives the likes of Argos, Mothercare, Thorntons, HMV and Game an excuse when explaining con falling UK sales to investors.

Or does it?

In the Christmas marathon, there were plenty of retailers, notably Sainsbury's, Debenhams, John Lewis and House of Fraser, operating at peak levels of fitness – both online and instore – who delivered an impressive result at the finish line, although the dreadful snow in December 2010 meant all chains were up against soft comparable sales.

However, Christmas 2011 will also be remembered for fierce discounting and a sea of sale signs, which means the final reckoning, will only come with the publication of profits. They will not be pretty for many.

But those, such as Next, with its stable management team and slick online operation, will be able to point to a rise – albeit a modest one – in annual profits.

Indeed, as one of the country's best-known retailers often says privately: pre-tax profit is the only figure that really matters.

It is here that Philip Clarke, Tesco's under-pressure boss, will again be top dog, with full-year profits up to about £3.6bn.

The world's third-biggest retailer is looking a bit pasty after a sickly Christmas in the UK, but by this bottom-line health check, its muscles are still far bigger than anyone else's and, judging by its comments yesterday, is up for the fight ahead.

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