John Lewis profits surge

Department stores and grocery group John Lewis Partnership unveiled a sales and profit surge in its first half, but warned that the rest of the year would be “much more challenging”.

Group sales advanced 6.7 per cent to£3.2 billion, generating a 50.6 per cent uplift in pre-tax profits to£146 million.

At the eponymous department store division, retail sales rose 6.1 per cent to£1.2 billion, with profits up 23.3 per cent to£97 million. There were strong performances from furniture and textiles, while sales at its Direct division rocketed 42 per cent.

Turnover at supermarket chain Waitrose leaped 7.1 per cent to£1.9 billion and profits soared 29.7 per cent to£140 million. The grocer has invested£20 million in price cuts and increased its share of the organic food market to 18 per cent.

John Lewis chairman Charlie Mayfield said the partnership had shown “tremendous momentum”, demonstrated by market share gains at both chains, as well as a strong financial performance.

“The growth in profit stems mainly from a combination of improved margins, efficiency initiatives and tight control of operating and central costs,” he said.

In the second half, group sales were up 5 per cent against last year by the end of the sixth week. Like-for-likes climbed 4 per cent at Waitrose, but sales were up only 2 per cent at the department stores.

Despite evidence of a toughening market, Mayfield said: “Consumer spending is continuing to hold up well against a backdrop of the recent turmoil in financial markets, higher interest rates and a more subdued housing market.

“We are confident that our product ranges will inspire customers and that our partners will continue to set us apart from the competition, enabling our businesses to achieve further growth.”