Morrisons expects shoppers to treat themselves at Christmas and then for the focus to return to value in 2011.

Third-quarter like-for-likes excluding fuel were up 1.3% and total sales up 2.8%, and finance director Richard Pennycook said the overall outlook remained “difficult”.

He said the retailer planned to extend its Christmas collector card scheme into January to help customers when VAT goes up.

Morrisons had expected its growth to slow and fall more in line with the market average. “Volumes are not growing dramatically but they’re not declining either,” he said.

Despite it no longer outperforming the market in sales growth,

Jefferies rates the shares a buy. The broker said growth “remains impressive given a tough comps structure,” and that “potential for cost efficiencies remains significant”.

Shore Capital also rates Morrisons’ shares a buy.