John Lewis record but sales slowing

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Sales at the 26 department stores and internet-based John Lewis Direct have risen by just 2% in the last five weeks as shoppers tighten their belts.

It is just a fraction of the double-digit growth the chain has enjoyed in recent years and does not bode well for the rest of the High Street.

Analysts have warned that if John Lewis is struggling, its rivals will be in serious trouble. Panmure Gordon reckons last month was a "graveyard" for British retailers.

Charlie Mayfield, chairman of the John Lewis Partnership, which owns the department stores and the Waitrose supermarkets chain, said conditions have been getting worse since the onset of the credit crunch in the summer.

"The slowdown has been coming for about nine months or so," he said. "I don't think there will be a recession, but I do think conditions will be tough."

Like-for-like sales rose by more than 10% in 2006 but this slowed to 5% last year and 2% in February.

Mayfield said this was better than many of its rivals. "I have been very pleased to see how resilient our trade has been," he said. "During the tougher second half of the year, we were taking share from the market at a faster rate than in the first half.

"Overall, our view is that the conditions are challenging now and we think they will continue to be challenging in the year ahead. There might be an improvement at the end of the year, but that would be a brave prediction to make."

It came as John Lewis reported a 12% rise in annual profits to a record £189.9 million on sales of £2.8 billion.

Sales at the Oxford Street store were up 3.2%, while Peter Jones on Sloane Square was up 0.6% and Kingston 5.7%. Sales fell nearly 1% in Brent Cross and at the Bluewater shopping centre. Internetsales soared 44.6% to £268.1 million. Mayfield was bullish about the partnership's prospects and said the success of Waitrose would "cushion" the downturn at John Lewis.

Waitrose profits soared 22% to £212.1 million last year on sales of £4 billion. Sales in the last five weeks were up 8%. Group profits rose 18.7% to £379.8 on a 6.3% rise in sales to £6.8 billion.