Profits slide at John Lewis as crunch hits

THE John Lewis Partnership, seen as a bellwether for middle-class consumer confidence, yesterday reported a 20 per cent dive in first-half profits.<br /><br />Despite a strong performance from its grocery chain Waitrose, the group said pre-tax profits were down by &pound;21m to &pound;86.3m in the six months to 1 August. The group&rsquo;s department store, famed for its &ldquo;never knowingly undersold&rdquo; slogan, suffered a 2.9 per cent drop in sales, with like-for-like sales dropping by 4.7 per cent.<br /><br />John Lewis said sales fell 2.5 per cent in its electrical division, which sells iPods to televisions. But its Home division suffered a steeper 8.1 per cent drop in sales, as the weakening housing market dented demand for sofas and upmarket soft furnishings.<br /><br />Waitrose saw sales rise 7.4 per cent to &pound;2.18bn,&nbsp; boosted by the introduction of its essentials product range &ndash; aimed at stemming the flow of shoppers to its cheaper rivals. The group also cemented its premium grocery position, through the launch of the its new indulgent &ldquo;Seriously&rdquo; food range and its deal with the Prince of Wales&rsquo;s Duchy Originals.<br /><br />The group, which distributes half its profits among its staff, said net debt rose from &pound;148.3m to &pound;580.7m over the period, due to costs attributed to the purchase of 13 Somerfield stores. But it said it was &ldquo;well within the limits&rdquo; allowed by its bank and bond covenants.<br /><br />Chairman Charlie Mayfield said that while conditions remain challenging &ldquo;the economic environment has turned out to be better than we originally expected&rdquo;. But he added trading would be tough in 2010. <br /><br /><strong>FAST FACTS </strong>JOHN LEWIS<br />&9679; John Lewis was founded in 1864 and has since grown into the third-largest private company in the UK.<br />&9679; The partnership distributes half its profits among staff members