Profit surges at John Lewis

John Lewis, the department stores and supermarket group, has reported a 51% rise in first-half profit but cautioned that trade is becoming challenging.

John Lewis, which runs 26 department stores and 185 exclusive Waitrose food stores, announced that it made pretax profit of £146 million in the half year to July 28, fuelled by strong performances from both its department stores and Waitrose supermarkets. Many other store groups warned that trading conditions are getting tougher, as consumers weighed down by debt are feeling the effect of rising interest rates.

John Lewis, owned by its 68,000 staff, said first-half sales grew 6.7% to £3.2 billion, with a washout summer affecting trade, but overall having little impact. The group said sales of ice cream and white wine were down 50% and 30% respectively in June and July while sales of tinned soup were up 110%.

In comparison to other stores, John Lewis benefited from the wet summer, with sales led by furniture and carpets and profit margins increased by rising demand for own-brand goods. Managing director of the department stores division expects the stores to continue to outperform peers in the second half of its financial year, but said like-for-like sales growth was unlikely to equal the 6.4% accomplished in the first half.

Recently, many retailers have announced declining like-for-like sales, including sporting goods chain JJB Sports and fashion group Next.

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