Sales at John Lewis continue to struggle

John Lewis, owner of the Waitrose supermarket chain as well as the renowned employee-owned department store, is under pressure due to heavy discounting by its competitors.

Five of its stores experienced a fall in sales by over 20% last week with the Nottingham store reporting the worst fall of 23%, while stores at Peterborough, Reading and Bristol’s Cribbs Causeway were all down by around a fifth compared with a year ago.

Meanwhile, its Peter Jones store in Sloan Square London also saw a slump in sales of 21.4% against last year.

The group is a bellwether for retailers and also for the British economy and is bracing itself for a challenging Christmas.

On Sunday, the group said that sales throughout the division were down by over 13% in the week to last Saturday, as rivals such as Debenhams and M&S held discount days in an attempt to lure customers back into the shops.

At its upmarket chain, Waitrose, sales were also down for a second consecutive week, down 3.9%.

The group added that its fashion department saw sales down by 7.7% against last year. Electricals and home technology fell 13%, while Home revenues were down by 19.6%.

Andy Street, John Lewis managing director, explained that the stores were ready to pass on the 2.5% cut in VAT, which was announced earlier this week in the Pre-Budget Report. However, Mr Street said the new measures had created an ‘enormous amount of work at an already challenging time of year‘.

Howard Archer, chief UK economist at Global Insight, added that despite the cut in VAT and interest rates, retailers are still in for a difficult Christmas period and 2009 also looks set to be tough for the retail industry.

In related news, on Wednesday Woolworths and MFI were placed into administration.

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