Slower sales hit profits at John Lewis profits

FURTHER EVIDENCE of a slowdown in consumer spending emerged yesterday when John Lewis Partnership reported its first profits fall for five years, and official retail statistics revealed that high street spending remained weak in August.

Retail sales were up by 0.4 per cent in August from July, against an expected rise of 0.1 per cent. However, the figures for the three months to August were up just 2.6 per cent on the same period last year, the lowest growth for two years. The August figures showed falls in sales of household goods and textiles, clothing and footwear - areas which are quickly affected by falls in discretionary income or weakening confidence.

Food sales growth in the three months to August outpaced non-food sales compared with the same period last year, reversing a trend that has lasted nearly three years.

Analysts said the figures were difficult to interpret because of the poor summer weather, but were unlikely to support the case for an early cut in interest rates. "The underlying strength of high street spending is difficult to determine, but spending has certainly cooled since the spring," said Jonathan Loynes, economist at HSBC Markets.

Trevor Williams, economist at Lloyds TSB, said: "The trend of the last three months on the previous three months is the lowest since July 1996, and that is the point. A slowdown on the consumer side of the economy is taking place."

The sentiments were supported by half-year profits from John Lewis, which fell by 5 per cent to pounds 89.7m: the first profit fall at the group since 1993. Group pre-tax profits were boosted by a pounds 30m VAT refund, taking the total to pounds 119m.

John Lewis's department stores fell short of the company's own estimates with a 5.1 per cent rise in sales in the half compared to an estimate of 5.5 per cent. However, the figures were rescued by a good performance from its Waitrose supermarkets.

Sir Stuart Hampson, the chairman, blamed "the three Ws" - the poor summer weather, the football World Cup and the absence of windfalls from converting mutuals.

Sir Stuart said: "The partnership has had a succession of spectacular first-half results. Such a pace cannot be sustained indefinitely, and we knew that this year we would be facing more difficult trading conditions and extra costs to cover." He said that matching last year's bonus payments, which are made to John Lewis staff on the basis of profits, would be a significant challenge.

Next, the high street retailer which shocked the stock market with a profits warning in March, was also cautious on high street trading prospects yesterday as it reported a fall in profits from pounds 71.2m to pounds 50.2m. The slump was caused by buying mistakes which led to stock shortages in womenswear and childrenswear, said the company. Next shares fell by 37.5p to 407p, their lowest since late 1995.

David Jones, the chief executive, said: "Everyone tells me things are getting difficult, but we are well established enough to do better than most."

Julie Ramshaw, retail analyst at Morgan Stanley, said: "Next has delivered what it said it would but the market is not yet giving it the benefit of the doubt."

William Morrison, the Yorkshire supermarkets group, reported half-year profits of pounds 68.3m against pounds 61.7m in the period last year. The company is continuing to expand, with the prospect of adding 2,400 jobs. It hopes to add seven new stores next year.

Start your day with The Independent, sign up for daily news emails
The Queen and the letter sent to Charlie
Arts and Entertainment
Eurovision Song Contest 2015
EurovisionGoogle marks the 2015 show
Two lesbians hold hands at a gay pride parade.
peopleIrish journalist shares moving story on day of referendum
Arts and Entertainment
<b>Kathryn Williams</b>
When I was supporting Ray La Montagne I was six months pregnant. He had been touring for a year and he was exhausted and full of the cold. I was feeling motherly, so I would leave presents for him and his band: Tunnock's Tea Cakes, cold remedies and proper tea. Ray seemed painfully shy. He hardly spoke, hardly looked at you in the face. I felt like a dick speaking to him, but said "hi" every day. </p>
He was being courted by the same record company who had signed me and subsequently let me go, and I wanted him to know that there were people around who didn't want anything from him. At the Shepherds Bush Empire in London, on the last night of the tour, Ray stopped in his set to thank me for doing the support. He said I was a really good songwriter and people should buy my stuff. I was taken aback and felt emotionally overwhelmed. Later that year, just before I had my boy Louis, I was l asleep in bed with Radio 4 on when Louis moved around in my belly and woke me up. Ray was doing a session on the World Service. </p>
I really believe that Louis recognised the music from the tour, and when I gave birth to him at home I played Ray's record as something that he would recognise to come into the world with. </p>
booksKathryn Williams explores the works and influences of Sylvia Plath
Liz Kendall played a key role in the introduction of the smoking ban
newsLiz Kendall: profile
Life and Style
techPatent specifies 'anthropomorphic device' to control media devices
The PM proposed 'commonsense restrictions' on migrant benefits
voicesAndrew Grice: Prime Minister can talk 'one nation Conservatism' but putting it into action will be tougher
ebookA unique anthology of reporting and analysis of a crucial period of history
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Guru Careers: Software Developer / C# Developer

£40-50K: Guru Careers: We are seeking an experienced Software / C# Developer w...

Neil Pavier: Management Accountant

£45,000 - £55,000: Neil Pavier: Are you looking for your next opportunity for ...

Sheridan Maine: Commercial Accountant

£45,000 - £55,000: Sheridan Maine: Are you a newly qualified ACA/ACCA/ACMA qua...

Laura Norton: Project Accountant

£50,000 - £60,000: Laura Norton: Are you looking for an opportunity within a w...

Day In a Page

Sun, sex and an anthropological study: One British academic's summer of hell in Magaluf

Sun, sex and an anthropological study

One academic’s summer of hell in Magaluf
From Shakespeare to Rising Damp... to Vicious

Frances de la Tour's 50-year triumph

'Rising Damp' brought De la Tour such recognition that she could be forgiven if she'd never been able to move on. But at 70, she continues to flourish - and to beguile
'That Whitsun, I was late getting away...'

Ian McMillan on the Whitsun Weddings

This weekend is Whitsun, and while the festival may no longer resonate, Larkin's best-loved poem, lives on - along with the train journey at the heart of it
Kathryn Williams explores the works and influences of Sylvia Plath in a new light

Songs from the bell jar

Kathryn Williams explores the works and influences of Sylvia Plath
How one man's day in high heels showed him that Cannes must change its 'no flats' policy

One man's day in high heels

...showed him that Cannes must change its 'flats' policy
Is a quiet crusade to reform executive pay bearing fruit?

Is a quiet crusade to reform executive pay bearing fruit?

Dominic Rossi of Fidelity says his pressure on business to control rewards is working. But why aren’t other fund managers helping?
The King David Hotel gives precious work to Palestinians - unless peace talks are on

King David Hotel: Palestinians not included

The King David is special to Jerusalem. Nick Kochan checked in and discovered it has some special arrangements, too
More people moving from Australia to New Zealand than in the other direction for first time in 24 years

End of the Aussie brain drain

More people moving from Australia to New Zealand than in the other direction for first time in 24 years
Meditation is touted as a cure for mental instability but can it actually be bad for you?

Can meditation be bad for you?

Researching a mass murder, Dr Miguel Farias discovered that, far from bringing inner peace, meditation can leave devotees in pieces
Eurovision 2015: Australians will be cheering on their first-ever entrant this Saturday

Australia's first-ever Eurovision entrant

Australia, a nation of kitsch-worshippers, has always loved the Eurovision Song Contest. Maggie Alderson says it'll fit in fine
Letterman's final Late Show: Laughter, but no tears, as David takes his bow after 33 years

Laughter, but no tears, as Letterman takes his bow after 33 years

Veteran talkshow host steps down to plaudits from four presidents
Ivor Novello Awards 2015: Hozier wins with anti-Catholic song 'Take Me To Church' as John Whittingdale leads praise for Black Sabbath

Hozier's 'blasphemous' song takes Novello award

Singer joins Ed Sheeran and Clean Bandit in celebration of the best in British and Irish music
Tequila gold rush: The spirit has gone from a cheap shot to a multi-billion pound product

Join the tequila gold rush

The spirit has gone from a cheap shot to a multi-billion pound product
12 best statement wallpapers

12 best statement wallpapers

Make an impact and transform a room with a conversation-starting pattern
Paul Scholes column: Does David De Gea really want to leave Manchester United to fight it out for the No 1 spot at Real Madrid?

Paul Scholes column

Does David De Gea really want to leave Manchester United to fight it out for the No 1 spot at Real Madrid?