Fears of a massive consumer slowdown were defied yesterday as key retailers and a holiday company beat market expectations.

Europe's top travel firm TUI, which encompasses Thomson, Airtours and First Choice reported strong demand for holidays and said it was on track to meet 2008 analyst profit forecasts of around £316m.

The City rewarded it by lifting the shares 7.5%, or 18.25p, to 261.5p.

Debenhams, which has disappointed investors since returning to the stock market in 2006, said sales had fallen further than expected in the first half of its financial year but defied analysts' worst fears by saying it was still on track to meet profit forecasts.

Sales for the 26 weeks to March 1 were 1.2% higher, although on a like-for-like basis, discounting new store space, they were 0.7% down. Its shares rose 5.6%, or 3p, to 56.25p, ahead of the wider market.

Fashion chain Ted Baker, which began 20 years ago as a one-store operation selling dress shirts in Glasgow, also countered concerns of an impending economic crisis by revealing a 10% increase in pre-tax profit for the 12 months to January 26 to £22m.

Analysts have been particularly fearful of a consumer slowdown since Marks & Spencer, regarded by many as a bellwether stock reported it worst quarterly performance in two years in January. Cazenove predicted at the end of last week a particularly marked slowdown in the first half of 2008.

But Standard Life Investments global thematic strategist Frances Hudson said consumer stocks continued to be supported by a strong jobs market. However, she cautioned that the sector could be hit later in the year as price rises for raw materials and energy feed through and that an early Easter and Mother's Day had inflated some sales figures for the first quarter of the year.

This is borne out by comments from TUI Travel's chief executive Peter Long yesterday, who warned that although it has taken out hedges to secure its fuel price for summer, and to some extent for winter, in future seasons it could see fuel costs rise by 20%, an increase it will have to pass on to consumers.

In the UK, the firm served 7% fewer passengers over winter but charged more, pushing sales up 4%. Its sales are up 9% for summer 2008 holidays.