John Lewis set for higher profits

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John Lewis is expected to announce a rise in annual profits

Employee-owned John Lewis is expected to reveal another hike in annual profits next week despite a slowdown in sales as consumers rein in their spending.

The group, which runs supermarket Waitrose and Britain’s biggest department store by sales, has outperformed rivals for the past few years as its more affluent consumers were able to cope better during the recession.

However, weekly sales figures since the end of January have suggested that customers are starting to spend more cautiously.

Howard Archer, chief UK and European economist at IHS Global Insight, said: “It does appear that John Lewis sales have lost significant overall momentum in recent weeks, which is a worrying sign for consumer spending given that John Lewis has very much been an outperformer in the retail sector.”

The group is still expected to post a 15% rise in pre-tax profits to £352 million for the year to January, according to analysts Arden Partners.

The 147-year-old group will also announce the annual bonus for its 70,000 employees, or “partners”. Last year, staff shared a bonus pot of £151.3 million, with payments worth 15% of salary.

The group reported a slight bounceback in sales at its department store business in the seven days to last Saturday, helped by the half-term holiday break at schools in England. The figures showed sales of £54 million, including VAT, at its department stores, a 7.2% increase on last year.

David Barford, director of selling operations, said childrenswear saw a 34.8% increase on last year, supported by children’s shoes sales which were up 69%. He added: “Having said that, mums were shopping for themselves, too, and womenswear delivered 10%, with a particularly good performance from the John Lewis womenswear collection.”

Meanwhile, researcher Kantar Worldpanel’s latest data shows Waitrose, which has expanded rapidly with a large number of store openings in recent months, now has its largest-ever share of the UK grocery market.

Waitrose, with 244 branches including 13 convenience shops, saw sales including petrol in the week to February 26 increase 6.2% to £94.9 million.

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