John Lewis: We will buck Xmas gloom

John Lewis said it would outperform a falling retail market this Christmas, benefiting from the strength of its presence in the capital and investment, particularly in Internet shopping.

Andrew Murphy, retail director at the department store chain, said UK consumers were feeling cautious and vulnerable amid government cutbacks, rising prices and fears the economy could fall back into recession.

"Overall, partly due to strength in London, partly due to strength online and partly due to the fact that we've invested consistently through the economic cycle and continue to do so, we're actually feeling pretty positive about the differential between ourselves and the market.

"UK consumers generally will not sacrifice Christmas, virtually no matter what. Looking at our range for this year and in terms of our organizational preparedness, we think we are going to have an absolutely fantastic Christmas, relative to what there is on offer."

Murphy said sales at stores open over a year across the UK retail market (like-for-like sales) would "undoubtedly" be down this Christmas. But he was optimistic John Lewis could match last year's underlying sales.

"We were actually doing a lot of work in quarter three and quarter four last year on our estate so a lot of our (2010) shop figures were artificially depressed," he said.

"It gives us some confidence that we're in with a chance of coming close to those figures in same store (sales this year)."

Consumers are also struggling with subdued wage growth, a lack of credit, job insecurity, a stagnant housing market, and fears of eventual interest rate rises.

Retail sales barely grew in July, data showed on Thursday and analysts fear rioting earlier this month could further damage sentiment and heighten the risks to the UK's already fragile economic recovery.

But Murphy said he did not think the government should change course and delay its rapid deficit cuts, that opposition politicians and some economists fear are endangering recovery.

He said the firm would not be calling for a cut in VAT sales tax.

"This is a time really when we all have to be slightly more responsible citizens in big business than that and recognise the country has a profound problem, the western hemisphere has a profound economic problem.

"Anything that would in the short term be good for us is highly likely to be bad for the economy as a whole."