Dixons and Curry's stores performed strongly

But the operator of the Dixons, Curry's and PC World chains said it was cautious about future trading.

Curry's and Dixons saw strong festive sales, but The Link traded flat and like-for-like sales fell at PC World.

Dixons shares closed up 0.3% as it also unveiled a 23% rise in half-year pre-tax profits to �136.5m ($256.2m).

Difficult period

Yet it warned about the outlook for future trading, saying that it was cautious about the strength of consumer spending in the UK.

The interest rate increases have eventually come through to bite the retail sector John Clare, Dixons Check Dixons share price

"We expected Christmas to be difficult and, indeed, it turned out to be that, not just for us, but for the whole sector," said Dixons Group's chief executive John Clare.

Sales growth was slower over the festive period than in the previous five months.

Across the group, UK like-for-like sales rose 2% in the eight weeks to 8 January compared to a 5% rise in the 28 weeks to 13 November.

Sales in the final three weeks of December and the first week of January were up 3%, reflecting a strong performance in the week before Christmas.

The group's strongest performers were the Dixons and Curry's store chains which enjoyed 9% and 6% like-for-like growth respectively over the festive period.

However, like-for-like sales at PC World fell 7%.

There was a good recovery in the Dixons chain Nick Bubb, Evolution Securities

The chain was hurt by an almost 20% fall in computer prices, forced down by the weakness of the US dollar.

'OK performance'

Analysts reacted positively to the figures, pushing Dixons shares up 1.75p to 158.25p in afternoon trading.

"Dixons has been a potential Christmas casualty but the update and the results today are OK overall," said Nick Bubb, an analyst with Evolution Securities.

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"Curry's was not hurt at Christmas by the mooted price-war in big-ticket electrical items with Argos and Comet and there was a good recovery in the Dixons chain itself."

Dixons said it had performed strongly in the first half of its year despite fierce competition, with all its UK businesses enjoying like-for-like growth.

How Dixons brands performed over the festive period Currys: +6% Dixons: +9% PC World: -7% The Link: 0% Source: Like for like sales for the eight weeks to 8 January compared to 2003/4

Its sales from continuing operations rose 9% to �3.4bn over the period.

Slowdown

Mr Clare said the figures reflected strong sales over the summer months.

However, he stressed that sales of more expensive items had slowed down noticeably since then.

"The interest rate increases have eventually come through to bite the retail sector," he said.

"We are anticipating a difficult trading environment to continue."