Sep 17, 2009
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John Lewis sees tough 2010

Sep 17, 2009

By James Davey

LONDON (Reuters) - John Lewis JLP.UL, the employee-owned group seen as a barometer of British retailing, posted a 20 percent fall in first-half profit and said although its second-half had started well it expected a tough 2010. "We expect trading conditions for the remainder of 2009, and into 2010, to continue to be difficult," said Chairman Charlie Mayfield on Thursday 17 September echoing comments from fashion retail Next (NXT.L) on Wednesday 16 September.

John Lewis
Autumn-winter 2009 at John Lewis - Photo: www.johnlewis.com

He forecast "a slow, drawn-out economic recovery."

But despite this economic backdrop he said the 145-year-old group, which trades from 27 department stores and 214 Waitrose supermarkets and has a permanent staff of 69,000, would continue its aggressive investment programme.

Having spent 278 million pounds in the first-half it plans to invest 189 million pounds in the second in existing and new shops and formats and in developing its multi-channel offer.

John Lewis said it made a profit before tax of 86.3 million pounds for the six months to August 1, down from 107.3 million pounds last year, as it continued to cut prices to defend its market share.

The firm's department stores pursued their "never knowingly undersold" price matching policy and saw operating profit halve to 20.9 million pounds, but Waitrose's operating profit increased 15.7 percent to 121.1 million pounds, buoyed by the success of its lower priced "essential" ranges introduced in March.

The firm, which publishes weekly sales figures, said first-half sales increased 3.5 percent to 3.39 billion pounds. After six weeks of the second half, group sales were up 6.2 percent on last year, with Waitrose sales up 11.3 percent and department stores sales down 1.3 percent.

Separately on Thursday 17 September, home improvement retailer Kingfisher (KGF.L), owner of B&Q in the UK, reported a 35 percent rise in first-half profit, but said it was planning for difficult trading conditions ahead.

(Editing by Mark Potter and Rupert Winchester)

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