A weekend of “make-or-break” sales by Britain's embattled retailers yielded an encouraging rise in the number of high street shoppers prepared to brave the winter freeze, according to preliminary figures from Experian Footfall.

But heavy discounts of up to 50 per cent will make for wafer-thin profit margins and may not be enough to prevent a rash of retailers from facing collapse, the research firm said yesterday.

Marks & Spencer, a bellwether of British companies, will add to the gloom on the high street on Wednesday when it confirms that Christmas trading has been the worst for a decade and among the worst in its 80 years as a listed company.

The department store group will be one of a string of retailers, including Next and Debenhams, that will have to admit over the coming weeks that the downturn in consumer confidence has knocked the stuffing out of sales.

The prospect of a sharp rise in unemployment, combined with sliding house prices and rising pressure on household finances, will make for difficult times ahead for retailers.

Sir Stuart Rose, M&S's executive chairman, will tell investors that sales of general merchandise over the third quarter have fallen an estimated 8.5 per cent, while food sales have fallen by between 5 per cent and 10 per cent. The group's trading update covers the 13 weeks to December 27, including the crucial festive period, and will send a shiver of concern across the retail sector. “It's not going to be pretty; it's incredibly tough out there,” one retail analyst said.

Analysts are already forecasting that pre-tax profits at M&S will almost halve over the full year as the looming recession finally takes the shine off Sir Stuart's success. He has been at the helm for four years.

Consensus City forecasts are for M&S to deliver annual pre-tax profits of £629 million, a dramatic drop on the £1.1 billion reported last May. The bleak trading environment is also likely to put pressure on the dividend at M&S, whose board will not decide on the level of the final payout until May at the earliest.

The number of shoppers on Friday and Saturday increased by a net 4.4 per cent, Experian Footfall said. New Year's Day falling on a Thursday had helped to increase the number of shoppers by 14.4 per cent on Friday as households chose to shop at the end of the week and relax over the weekend. The number of shoppers fell by 3.9 per cent on Saturday, it said. A similar fall was to be expected again yesterday. said Anita Manan, senior quantitative analyst at the company. “It appears that people are all sale-ed out and will be waiting for the new lines,” she said. “Retailers are facing an extremely difficult year ahead as the slowdown in consumer spending adds to the pressure and increases the risks of insolvency,” she added.

Updates from Next and Debenhams, both due tomorrow, are likely to provide an indication whether sales have been a success. Debenhams, the No 2 department store chain behind John Lewis, marked down its prices. John Lewis had a similar strategy. It had record takings of £21.3 million on Saturday December 27, the first day of its clearance sale. Goods were offered at up to half price.

Next, however, held its prices, in an effort to maintain margins. Only J Sainsbury, which has been winning customers from both M&S and Waitrose, is expected to have defied the grim market and increased its Christmas sales.

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