The City is already starting to wind-down for Christmas. It's all right for some, but many of us still have plenty to be getting on with. Having said that, the drinks parties seem to happen every night and, in what must be pure coincidence, the flow of corporate results begins to slow noticeably. There is little point in releasing financial information in the immediate run-up to yuletide when there are no investors around to act on it.

Those remaining in the City will be keeping a keen eye on the retail sector for obvious reasons. Anecdotal evidence suggests that this will be a tough Christmas on the high street. A number of large retailers, including Marks & Spencer, have already started their winter sales in an attempt to drum up extra business.

The retailers are finally catching on to the trend that has been growing over the past few years. Canny shoppers have been increasingly scaling back pre-Christmas shopping to concentrate on New Year sales. Their attitude has been that goods bought in January may lose their Christmas tag, but in doing so can be less than half the price.

One particular section of the retail sector that always does well at this time of year, though, is food and drink retail. The area is officially known as the food and drug sector, and if you realise that hangover cures are a big seller over Christmas, then it is perhaps sensible to view supermarkets as such.

Tesco and Sainsbury have pulled out all the stops to ensure that the former Safeway stores have been rebranded and reopened, as soon as possible. Christmas food shopping can account for as much as two months-worth of turnover, so they just cannot afford to be closed down over this period. As well as the obligatory turkey and, if you must, sprouts, freezers tend to be filled with those goods that can easily be re-heated for parties or couch potato yuletide TV viewing.

Talking of freezers, sales of what are known as white goods have fallen dramatically in recent months. Fridge, freezer and washing machine sales are inextricably tied to the housing market. With house prices falling amid a lack of buyers, white goods sales, which had been doing very well up to the summer, are struggling. Equally, the share price of Dixons has taken a turn for the worse. Dixons has had to discount prices to keep sales going, and lower margins mean lower profits.

While most fashion retailers would appear to have experienced no let-up in sales, Burberry has announced that current trading was a little subdued. The company relies on cold weather to drive sales of its more expensive range of coats. In order to reinstate its brand as upmarket, the group decided to drop its baseball caps. In so doing, Burberry will forego the lucrative "chav" and football hooligan market, but believes its higher margin ranges will see it progress.

Burberry is majority owned by GUS, which has plenty of other irons in the fire. Argos, another division of GUS, continues to report roaring trading, with its select and buy policy finding favour with increasing numbers of shoppers.

With talk among economists of the stock market rising by between 12 per cent and 17 per cent next year, here's to a very Merry Christmas.

For investment advice contact Anthony Platts on 01642 608855.

Published: 14/12/2004