High street reports Christmas winners and losers

The fashion world and groups that invested in their online operations did well. Debenhams and Marks & Spencer struggled

Retail groups which invested in their online operations fared better over Christmas. Photograph: Yui Mok/PA

With most of the high street having now reported how they fared over the festive season, the sector has divided clearly into Christmas winners and losers .

Early expectations had been high for a bonanza at Christmas, given the recovering economy and growing consumer confidence. But by mid-December disappointing sales and big discounts suggested the sector was struggling.

In the end, groups that invested in their ranges, stores and, particularly, their online operations did well.

Next was the star of the fashion world. Its strong top-notch online business helped it resist pressure to cut prices, giving the company a record Christmas. By contrast, Debenhams, with a substandard internet offering, warned on New Year's Day that its trading was poor and nowfaces demands from Sports Direct founder Mike Ashley for the companies to work together.

Marks & Spencer boss Marc Bolland admitted pressure to cut prices drove non-food sales below expectations and vowed to catch up with Next online.

With shoppers using the internet more than ever, online fashion specialist Asos boomed and even Moss Bros, written off by many a few years ago, benefited from an online overhaul.

Even at the luxury end of the market, online was important. Burberrysales rose 14% in the final three months of 2013 as the high-end brandhired more service staff in shops and online and equipped store assistants with iPads to help customers order goods.

Argos, owned by Home Retail Group, and Dixons were branded dinosaurs in the recent past but both businesses, which reported sales on Thursday, have profited from marrying their stores with strong online operations. At their peak, purchases on phones and tablets neared 30% of Argos's pre-Christmas sales, helping it record the best Christmas for more than 10 years.

Dixons had a quiet run-up to Christmas but sales of video games, TVs and fridges took off "like a rocket" on Boxing Day, chief executive Seb James said. The "weird" pattern of trading "isn't good for the blood pressure but it all turned out brilliantly", he added.

Britain's big four supermarkets faced pressure from German value upstarts Aldi and Lidl, which had record UK Christmas trading. Only Sainsbury's emerged as a relative winner by defying expectations and achieving a small increase in like-for-like sales, helped by online trade. As well as suffering competition from Aldi and Lidl, Tesco was afflicted by the run-down state of many of its UK stores while Morrisons blamed its lack of online sales and late move into convenience stores for a profit warning.

Morrisons finally started selling food online this week through Ocado, the online-only food retailer. The deal with Morrisons has turned round Ocado's fortunes, helping to ease doubts that its giant service centres would ever produce a profit.

Reporting sales up 21% in the six weeks to 6 January, Ocado finance director Duncan Tatton-Brown said shoppers who already bought other goods online had reached an "inflexion point" and no longer wanted to queue at counters to buy food when they could order from home.

"We are cautious [on consumer demand] but the much bigger factor for us is that the channel shift is happening," he said.