John Lewis lightens high street's gloom

John Lewis is expected to buck much of the gloom on the high street and unveil bumper profits later this week.

The department store group declined to discuss the figures for the first half of this year ahead of its announcement. But analysts believe the percentage sales growth will be in the double digits, while pre-tax profits are likely to come in between £90m and £95m.

That will be a substantial increase on profits of £78m in the same period last year, which represented a 3 per cent decline on 2004. At the time, the group's chairman, Sir Stuart Hampson, described conditions on the high street as "the worst for 15 years".

Since then, however, conditions have improved for the retailer, a partnership which also owns the posh people's supermarket chain Waitrose. Full-year sales in 2005 were £5.8bn, a rise of 8 per cent, and profits up 10 per cent at £252m. As a result, the group's 65,000 staff, or "partners", received 15 per cent of their salaries as bonuses.

Trading is thought to have continued to be robust during the first half of this year. Waitrose in particular has benefited from the World Cup and the summer heatwave, as shoppers stocked up on beer, snacks and barbecue food. Electrical goods also sold well.

Andy Street, John Lewis's human resources director and a member of the board, would concede only that the numbers would be strong, and attributed much of that to the company's unique partnership structure and other measures, such as a new cap for directors' pay.

The group's existing cap limits the amount directors can be paid to 75 times the earnings of the average employee. But, said Mr Street: "We're updating it. We're reducing the sterling sum by about 10 per cent."