Britain's WH Smith, the newspaper and book retailer, reported better-than-expected profits, contrasting with a profit warning from bakery chain Greggs, while both firms reckoned they could weather the consumer slump.
The retailers highlighted a deteriorating consumer environment as cash-strapped Britons, hit by higher food and fuel costs, sliding house prices and growing financial uncertainty rein-in spending.
But while WH Smith Plc was able to report a better-than-expected 15 per cent increase in full-year profit, sending its shares up to 10 per cent higher, Greggs issued a profit warning and its shares slumped by up to eight per cent.
WH Smith's results benefited from cost-cutting and an improvement in gross margins by concentrating on selling more profitable product and minimising markdowns.
"Consumer spending is challenged at the moment. Whilst we're not completely immune, relative to other people we're probably a lot less impacted," said chief executive officer Kate Swann, who joined the group in 2003.
"Our average transaction value ... is about £5 so it's not a large outlay for people, so you won't see us impacted in the same way as some of the big ticket retailers."
The group, which operates from 1,000 stores in the UK, is selling more stationery, books, newspapers and magazines and fewer entertainment products such as CDs, DVDs, computer games and consoles.
WH Smith made a profit before tax and exceptional items of £76 million.
That was above analysts' average forecast of £74 million and £66 million in the previous year. Total sales rose four per cent to £1.35 billion, but sales on a like-for-like basis, which strips out the impact of new stores, were down two per cent.
Ms Swann said she expected the group to perform well over the Christmas trading season compared with other UK retailers.
The key trading period would be competitive, she said, but the company had planned accordingly.
Greggs, which sells sandwiches and snacks from around 1,400 shops, also has a low average transaction value and is normally regarded as a defensive play in tough economic times.
Yet it was forced to cut its full-year profit forecast by £3 million, blaming a weather-related dip in sales and a decision not to fully pass on the rise in its energy and raw material costs.
The firm's like-for-like sales growth was 3.9 per cent in the 16 weeks to October 4, down from 5.8 per cent after the first six weeks of that period. But chief executive officer Ken McMeikan regarded the drop-off in growth as temporary and believes Greggs can benefit from the more austere climate.
"In these sort of economic times, people do still treat themselves but it tends to be in a much smaller way. So you may not buy yourself a plasma television, but you certainly would go out and buy yourself something sweet," he said.
The updates came as a survey from the Halifax showed British house prices fell at their sharpest annual rate in at least 25 years last month, as the credit crunch continued to take its toll on the housing market.
Booker Group, the cash and carry retailer, released an upbeat statement reporting a 29 per cent increase in first-half profit and said it continued to trade in line with management hopes.