LONDON - The John Lewis department store group announced a 3 percent drop in half-year profits, to £78 million yesterday and blamed the unusually tough conditions on the High Street for the same.
The chairman of the departmental chain called the prevailing conditions on the High Street as "the worst for 15 years." Sir Stuart Hampson said that the trading conditions in the non-food sector were harsh and that the consumers were reining in spending as they were 'spooked' by the gloomy market conditions. This loss of profits at John Lewis seemed especially bad since the group had been posting decent turnovers over the last decade.
"There's no reason for confidence to be as bad as it is. We have earnings growth and full employment. Customers have just been spooked. This is not Armageddon. It’s uncomfortable, but let's just get on with it and trade through it," said Sir Hampson.
The employee-owned partnership has shown contrasting results in the first six months of the current year as like-for-like sales fell by 1.5 percent, but profits took a 21 percent hit and fell to £51 million in the six months ending July. John Lewis is not the only store reeling under the unusually strict consumer spending; Next, Marks & Spencer, Argos, Woolworths, B&Q, Kingfisher and supermarket groups Tesco and Wm Morrison have already reported that the tough conditions have affected their sales as well as balance sheets.
The only bright spot for John Lewis has been supermarket chain, Waitrose, which saw a 17 percent growth thanks to the acquisitions of Safeway stores from Morrisons. Overall, the total sales were up 10 per cent to £2.7 billion, but the departmental store business continued to reel under the tough conditions. "There's been plenty of recent comment that high street trading over the last six months has been the worst in 15 years," said Sir Stuart.
"I'd certainly agree with that - particularly the severity of the downturn for non-food retail spending." The group maintained that it entered the second half of the year in a strong manner but had a cautious outlook for the remaining six months of the year, "The first half-year outturn for John Lewis has always been of less significance for the Partnership's full-year result than the second half, but we do not expect any improvement in the market in this period," it said in a statement.
Posted
on : Sat, 24 Sep 2005 09:50 GMT | Business News
By : Mike Lawson
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