Dixons, the high street retailer that also owns Currys, has revealed a 3 per cent dip in group comparative sales for the four months to the end of August, but the shares held up strongly as the City expressed relief the figures were not far worse.

In a downbeat trading statement circulated at today's annual meeting, Dixons bemoaned a 4 per cent slip in like-for-like sales at Currys, part of its electrical goods division, and a 7 per cent slide in comparative sales at PC World, its computer retail outlets.

The retailer blamed the "challenging consumer environment" and a "weak" market for white goods for an overall slide in like-for-like sales of 11 per cent in its computing and communications division and growth of just 1 per cent in electrical sales during the period.

But despite the disappointing sales figures, shares in Dixons rose confidently this morning - at one point leading the FTSE 100 early risers - after some dealers had expressed fears in advance of today's trading statement that the retailer was preparing to issue a profits warning.

Analysts at Merrill Lynch were predicting an 8 per cent decline in total sales at Currys, where sales actually fell by just 3 per cent.

Towards the end of the morning, Dixons shares were trading 2.5p - or 1.6 per cent - higher at 156.5p, valuing the retailer at more than £2.86 billion.

A strong performance by the international division, with growth in like-for-like sales of 13 per cent in Ireland and 8 per cent in Greece, helped balance the weak showing by the British businesses.

International electricals sales were up by 5 per cent on a like-for-like basis.

John Clare, the chief executive, said: "The first 16 weeks of the financial year are traditionally a quieter period for our business and it is early to extrapolate trends for the balance of the year.

"We are pleased with progress of our international operations, while we remain cautious about prospects in the UK, where we have experienced the slowdown in consumer expenditure.

"We will focus on driving sales growth as we approach our peak season, but we will underpin this with careful margin and cost management."

However, of greater concern to Dixons is the performance of its Link Communications mobile phone shops, where like-for-like sales during the period fell by a precipitous 28 per cent. Total sales slumped by a fifth.

Dixons described the sales figures for the Link as "disappointing" and attributed the fall to intense competition in the British market for mobiles and the high saturation of mobile phone ownership.

A spokesman - who pointed out that Link accounts for only about 5 per cent of group sales - said the retailer was taking steps to address its problems, including a high-profile TV and press advertising campaign.

The fall in comparative sales at Dixons came as the British Retail Consortium, a lobby group for retailers' business interests, highlighted a fall in prices on the high street and renewed its call for a further cut in the cost of borrowing to help spur consumer demand.

As the consortium reported that shop prices in August were nearly 0.5 per cent lower than during the same period last year, Kevin Hawkins, its director-general, said "Even with the recent heavy discounting and sales promotions coming to an end, intense competition in the retail market and weak consumer confidence continues to keep prices low.

"Although this is obviously good news for the consumer, it is not sustainable for retailers, especially as their operational costs are rising well above the current rate of inflation. While we welcome the recent interest rate decision by the MPC, a further cut is needed to have any positive impact on consumer confidence."

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