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.
Despite a strong performance from its grocery chain Waitrose, the group said pre-tax profits were down by £21m to £86.3m in the six months to 1 August. The group’s department store, famed for its “never knowingly undersold” slogan, suffered a 2.9 per cent drop in sales, with like-for-like sales dropping by 4.7 per cent.
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.
Waitrose saw sales rise 7.4 per cent to £2.18bn, boosted by the introduction of its essentials product range – 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 “Seriously” food range and its deal with the Prince of Wales’s Duchy Originals.
The group, which distributes half its profits among its staff, said net debt rose from £148.3m to £580.7m over the period, due to costs attributed to the purchase of 13 Somerfield stores. But it said it was “well within the limits” allowed by its bank and bond covenants.
Chairman Charlie Mayfield said that while conditions remain challenging “the economic environment has turned out to be better than we originally expected”. But he added trading would be tough in 2010.
FAST FACTS JOHN LEWIS
&9679; John Lewis was founded in 1864 and has since grown into the third-largest private company in the UK.
&9679; The partnership distributes half its profits among staff members