Key retail stocks soared yesterday as investors pinned their hopes on a post-Christmas sales surge.

KEY retail stocks soared yesterday as investors pinned their hopes on a post-Christmas sales surge.

Figures from data company Experian showed that shopper numbers were up 2.7% between Friday and Sunday compared to last year.

There is some evidence this is being converted into sales, with John Lewis reporting that its department store sales rose by 2.4% year-on-year in the five weeks to January 3, while on a like-for-like basis they were flat. This comes after double-digit year-on-year sales falls in November.

The John Lewis department store figures are closely watched as they are seen as a good bellweather for the health of consumer spending.

The owner of the London department store Liberty said it had beaten internal expectations in December. MWB Group said that while trading in November reflected the wider slowdown, December sales almost matched last year's record levels.

The footfall figures raise hopes that the pre-Christmas slump, which saw many outlets starting their sales early, has been followed by a New Year boom.

The complicating factor is the changing positioning of the holiday dates, with a Thursday New Year's Day encouraging workers south of the border to join those in Scotland by taking January 2 off and spending the day shopping.

Footfall figures for the remainder of the weekend were down on last year.

It is also unclear whether increased footfall has led to greater revenue for stores given the substantial discounting taking place.

Even so, several key stocks soared, with Debenhams, which is thought to be looking at a fundraising to reduce its debt burden, up 3p, or 11.8%, at 28.5p, and Marks & Spencer, which provides a trading update to the market tomorrow, rising 9p - or 4.1% - to 230p. Liberty owner MWB Group closed up 3p, or 10%, at 33p.

Next, which provides a Christmas trading update today, was off 18p at 1091p.

Despite the share price rises, the challenges facing the sector were illustrated by news that around 850 employees were made redundant from Adams Childrenswear yesterday after administrators closed 111 stores. They are keeping the remaining 160 open in the hope of finding a buyer.

Fragrance retailer Passion for Perfume also appointed administrators and made 194 staff redundant from its 55-store chain, 15 of which are in Scotland.

Figures published by accountant Grant Thornton yesterday showed that negative trading statements issued by retailers on the stock exchange during the fourth quarter of 2008 have matched the highest level yet of 27%, up from 22% in the last quarter of 2007 and the weakest showing since the beginning of 2005.

David Bush, head of Grant Thornton's retail services team, said: "Like-for-like sales figures showed a dramatic fall in activity. Only 29% of all retailers showed an increase in sales. This is compared to the same period last year when in Q4 2007 the reported figure was 65%."

He added: "This has been a particularly harrowing three months for retail trade, with some large familiar brand names going into administration and most having to seriously discount their products merely to turn stock into cash. It is highly likely that the Christmas trading updates which will be released in the next few weeks will be extremely bleak with even the stronger retailers struggling for sales."

Philip Dorgan, of Panmure Gordon, also warned clients yesterday that the Christmas trading figures will be weak: "In the general retail sector, the numbers will be poor and there will be downgrades to consensus earnings forecasts. However, we believe that, taking a 12-month view, many share prices are already discounting the bad news.

"Anyone who expects a good Christmas for sales and margins needs to get out more."