John Lewis sales fall for the second week in row

May 24 2008 by Peter McCusker, The Journal

DEPARTMENT store chain John Lewis heightened nerves on the high street by reporting a second successive fall in weekly sales.

The group described the 1.8% decline for the week to last Saturday as a “disappointing outcome” and said there was no doubt it faced tough conditions.

On-line sales saw a 16% rise but there were falls at most stores including a 3.4% drop at its Newcastle branch.

John Lewis, which has been one of the strongest performers on the high street in recent years, reported a 4.3% drop in sales in the previous week.

Howard Archer, an economist at Global Insight, said John Lewis sales were seen as a good bellwether for the health of consumer spending and contrasted with yesterday’s official figures showing a moderate 0.2% drop in sales in April. He added: “News that sales at John Lewis department stores fell 1.8% reinforces suspicions that UK consumer spending is significantly weaker than the relatively resilient picture currently portrayed by the hard retail sales data.”

John Lewis said it believed the warm weather in the first part of the week may have contributed to the disappointing sales, with figures showing an improvement in the cooler and wet conditions last Saturday.

John Lewis director Dan Knowles said: “By the high standards we set ourselves, being below last year has to be considered a disappointing outcome.” He added: “All indications are that we continue to do better than most, and as always we must ensure we drive sales and contain costs through this difficult market.”

John Lewis said four of its 26 branches traded ahead of last year, while its online operation overcame a strong figure from a year ago to post a sales increase of 16.1%.

The company’s Knight & Lee store at Southsea improved sales by 4.6%, despite the distraction of Portsmouth’s FA Cup Final appearance.

John Lewis staff recently celebrated the award of one-fifth of their salary as an annual bonus. Colleagues at supermarket chain Waitrose also benefited.

The pay-out followed a strong year for the JL Partnership, with profits for the year ended January 26 up £59.7m to £379.8m and overall group sales from continuing operations up 6.3% to £6.8bn.

At Waitrose, sales were 7.8% higher at £78.2m last week.