John Lewis suffers third fall in profits

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The Independent Online
JOHN LEWIS Partnership, the privately-owned retailer at the centre of a demutualisation debate, reported its third successive slump in profits, with the department store operation responsible for the bulk of the fall.

Profits for the six months to July were 22 per cent lower at pounds 77m due largely to weak furnishings sales, which account for two-thirds of its department store turnover.

However, the company said there had been signs of improvement recently, due to the resurgence in the housing market. "The market as a whole has been difficult," said Sir Stuart Hampson, the chairman. "With our strong bias towards furnishings we are more cyclical and furnishings tend to lag the housing market."

Department store sales rose by just 1 per cent despite the opening of two new stores in Glasgow and Bluewater Park in Kent. The Waitrose supermarkets did better with a 6 per cent sales increase.

Sir Stuart again attempted to calm the storm over the possible sale of the partnership which, in theory, could lead to windfall payments of pounds 70,000 to pounds 100,000 for the 39,000 staff.

He said: "To put this in perspective, The Gazette [the company's staff newsletter] has received just 62 letters arguing for a sale from nearly 40,000 staff." Around 71 letters have been submitted in favour of maintaining mutual ownership.

The matter will be discussed next week at the group's central council meeting. However, Sir Stuart said it would not lead to a ballot or referendum as the group's ownership is controlled via a trust set up to benefit future generations of John Lewis workers, not just the current workforce.

He said it would take an Act of Parliament to change the trust set up by the group's founder, John Spedan Lewis, in 1929. "I can't see the Government doing that."