John Lewis , the biggest department store group, said sales rose by 2 percent last week, benefiting from increased sales of winter clothes and Christmas gifts.

The employee-owned group, seen as a retail bellwether, said on Sunday that department store sales rose to 123.5 million pounds ($192.9 million) in the week to December 10.

The 2 percent figure was a gross number, inclusive of VAT sales tax and new space contribution.

Analysts estimate sales had fallen 5 percent, excluding VAT and new space.

With UK disposable incomes squeezed by rising prices, muted wages growth and government austerity measures, British retailers are nervous about consumer spending in the key Christmas trading period and high street discounting is rife.

Industry data for November was weak and companies such as fashion retailer French Connection and video games retailer Game have issued pre-Christmas profit warnings.

On Wednesday, outdoor goods firm Blacks Leisure put itself up for sale, and on Thursday shoe shop group Barratts collapsed into administration, threatening nearly 4,000 jobs.

($1 = 0.6402 British pounds)

(Reporting by Matt Scuffham; Editing by David Hulmes)