Quality products boost John Lewis results

The high street can breathe a sigh of relief at John Lewis's excellent first half results. A major indicator of high street conditions, the retail group reported an operating profit surge of 25 percent to £112 million on sales up 11 percent to £3 billion. Profit before tax leapt 25 percent to £97 million. The group attributed the outstanding results in a challenging retail climate to "well differentiated, innovative and contemporary products and services and through our Partners' commitment to delivering great service, quality and value." The group's 64.000 employees all share in the profits, a scheme that is clearly a great motivator and highly successful. The partnership also revealed plans to invest £50 million in the Stratford City Olympic development in East London , which will welcome the opening of a John Lewis department store and Waitrose supermarket in 2010. The initiative will create 800 new jobs.

Both John Lewis and Waitrose witnessed a surge in sales. John Lewis posted an 11 percent gain in retail sales to £1.2 billion, with profit up a whopping 55 percent to £79 million. Like-for-like sales were also up 9.2 percent thanks to "more contemporary ranges across all key categories". Fashion sales rose 8 percent, with men's wear performing particularly well. Meanwhile, the company's online sales at John Lewis Direct grew 70 percent. Waitrose sales rose 11 percent to £1.8 billion. "These results show the power of the full engagement of Partners in a different kind of business, demonstrating a clear link between commercial performance and satisfaction felt by Partners in serving customers in a business they own," said Chairman Sir Stuart Hampson. He added that higher operating costs had been offset by efficient cost control in branches and a productivity improvement of 12 percent.

The group's outlook for the second half is optimistic. During the first six weeks of the period sales were up 12 percent on last year. Hampton , however, warned that the "economic climate does not favour retailing at present" and said that the second half would be "challenging". Sales are expected to slow towards Christmas as the group comes up against harder comparables, a spokesman for the firm said. Hampton ended on a positive note, stating he remained "confident that we will continue to improve on last year's performance."