UK retailers John Lewis and Next post higher profit

Retailers John Lewis and Next, two of Britain’s biggest high street names, reported an increase in half-year profit in their financial reports released today.

Employee-owned partnership John Lewis, which operates John Lewis department stores and Waitrose supermarkets across the UK, announced a 60% rise in pre-tax profit in the first half of the year, to GBP144.5m. Revenues for the six months to 28 July were up 8.6% to GBP3.9bn after the company registered strong online growth as well as additional sales linked to the Olympics and Paralympics and the Queen’s Diamond Jubilee.

Consumer demand remains fragile and the pace of growth in the second half is expected to be slower, but it will remain in positive territory, John Lewis said.

A smaller rise in half-year earnings was announced by fashion retailer Next, which declared pre-tax profit of GBP251m for the six months to 31 July, up 10.2% on the same period last year. Half-year revenues grew 4.8% to GBP1.6bn, with a decline in retail like-for-like sales offset by growth in the company’s online business and the addition of profitable new space.

Next is sticking with its full-year guidance that sales, profit and earnings per share will improve on last year.

The company noted, however, that its sales in August and early September have been disappointing and said that it remains cautious about the economic outlook.

Last week the British Retail Consortium (BRC) reported that UK retail sales fell 0.4% in August, as the feelgood factor from the London Olympic Games failed to inspire spending.

BRC director general Stephen Robertson commented that in the run-up to Christmas retailers will be hoping that sales that did not happen in August have been postponed, and not lost entirely.

(USD1=GBP0.62)