Supermarkets wind up for a competitive Christmas

By Greg Walton

The big Christmas food race has started. As the UK's supermarkets make up to 20 per cent of their profit over the holiday period, the five big chains are gearing up for an all out food-fight.

Marks & Spencer has already started its advertising campaign with a star-studded cast, including Joanna Lumley and Jennifer Saunders (above), while Tesco and Asda have kicked off their attack with a multi-million pound price war.

Analysts will be looking for clues to how trading is shaping up when Morrisons' chief executive, Marc Bolland, gives his trading update. Nick Raynor at the Share Centre is cautious about Morissons: "Price-cutting wars will be very apparent. This is good for the consumer, but not so good for the bottom line." But Sam Hart, an analyst at Charles Stanley, is more upbeat: "The return of customer confidence has benefited Morrisons. They've got the strongest balance sheet in the business."

Justin King of Sainsbury's, who reported excellent results last week, predicted a 'feisty' season while Marks & Spencer's chief executive, Sir Stuart Rose, was cautious about Christmas at the company's recent first-half result, describing the high street as "competitive".

Halfords and Mothercare will also be reporting this week and are expected to show modest improvements.