John Lewis in recovery as its profit rises

City A.M. Reporter
JOHN Lewis warned yesterday that trading conditions were likely to get tougher as tax hikes and public spending cuts hit shoppers, even as it reported a 28 per cent rise in first-half profit.

The group, owned by its 70,000 staff, said its strong first-half performance gave it confidence that both its department stores and grocery chain Waitrose would cope well.

Chairman Charlie Mayfield said: “Despite the economic headwinds, and tougher comparables in the second half, we remain confident that both Waitrose and John Lewis will continue to grow ahead of the market.”

John Lewis, which runs 28 department stores, two “at home” shops and 231 Waitrose supermarkets, made a pre-tax profit of £111m in the six months to 31 July. Sales rose 12.4 per cent to £3.8bn, and were up 9.9 per cent in the first six weeks of its second half.

Mayfield also warned of “economic headwinds” for the retail sector as a whole, as tax hikes and public spending cuts hit shoppers’ spending power.

However, he said he was particularly pleased by growth in the company’s online operations.

Waitrose’s online grocery service, which operates at branch level, and offers similar items to Ocado, reported a 54 per cent surge in sales. The business remains small, though analysts will be watching to see how it affects Ocado, the recently-floated home delivery company. Ocado has a long-term deal to supply Waitrose groceries. Mayfield said the relationship with Ocado remained strong.