John Lewis continues to defy high street gloom

published 13 September 2012

John Lewis ignored the travails of other high street retailers, posting a big jump in profits in the first half.

The firm was once known as a 'high street bellwether' as it gave an insight into general retail activity, but in recent times it has been more a beacon of hope for struggling firms.

The retail partnership made a pre-tax profit of £144.5m in the first half, up 60% from a year earlier.

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However, it warned it wouldn't keep this pace up during the second half.

Like-for-like sales at the John Lewis department stores - which strips out new openings - were up 9.2%, while Waitrose saw a 2.2% rise.

The most recent official figures showed that retail sales rose by 0.3% in July, when compared with June, and by 2.8% from a year earlier.

Revenue were up 8.6% to £3.9bn and the firm said that while consumer demand remained fragile, it had stabilised and it saw opportunities to grow market share.

Chairman Charlie Mayfield said the company had benefitted from a number of one-off events, such as the Diamond Jubilee, the lead up to the London 2012 Olympic and Paralympic Games and the anniversary of the VAT increase, which depressed sales last year.

John Lewis also benefitted from the launch of new product ranges as well as improvements to its online offering and efficiency savings.

"Our rate of growth will remain positive but will be slower in the second half," Mayfield said.

"With further investment planned in that period to strengthen our business for the longer term, the rapid rate of profit increase is not expected to be carried through to the full year."

The partnership noted that six weeks into the second half, gross sales were 10.3% higher than last year.

Waitrose gross sales had increased by 8.7% - 4.5% on a like-for-like basis - and John Lewis gross sales were 13.1% higher than last year, or 8.5% like-for-like.