Retailer Marks & Spencer said today that consumers were feeling more confident as it posted a better-than-expected sales performance.
The high street giant saw UK like-for-like sales fall by just 0.5 per cent in the 13 weeks to 26 September - better than most forecasts and continuing the improving trend seen over the last three quarters.
Executive chairman Sir Stuart Rose said: "Whilst there is more visibility in the marketplace and consumers appear more confident, we continue to be cautious about the outlook.
"We expect 2010 to be a tough year and we will continue to run the business accordingly."
The retailer said food sales ended eight quarters of decline, levelling out during the period after the relaunch of its M&S Cook range.
Although like-for-like general merchandising sales were down 0.8 per cent, Sir Stuart said the group had held its market share in clothing.
Sir Stuart also announced that the firm would be taking on an extra 20,000 staff - more than last year - ahead of the all-important Christmas season.
He said he was "quietly confident" over festive trading but refused to be drawn on predictions of a first return to like-for-like sales growth for the overall group since 2007.
But the executive chairman added there would be "pressure on pockets" next year with the prospect of tax rises, rising unemployment and continuing economic uncertainty.
"It is going to be tough going for the next 12-18 months... I don't think it is going to be spend, spend, spend," he said.
Pleas for the end of the temporary cut in VAT at the end of December to be extended for a week have also fallen on deaf ears so far at the Treasury, Sir Stuart said.
Despite lobbying from retailers such as M&S, Next and Sir Philip Green's Arcadia, the VAT rise - coming halfway through the festive sales season - is set to add to the pressure at a critical time for the group.
"All we are asking for is a week's respite to get the sale out of the way," Sir Stuart added.