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John Lewis says trading 'extremely challenging'

Department store group John Lewis says trading on the High Street is tough but its sales are still growing.

The firm, which operates department stores and Waitrose supermarkets, said sales grew 1% and 4% respectively amid "extremely challenging" conditions.

These and increased investment sent six-month profits down 18% to £90.4m, but these were also hit by its "never knowingly undersold" commitment.

John Lewis said that a net 3,500 new jobs had been created in the period.

The company's chairman, John Mayfield, said the company's price pledge was costing it money as rivals discounted sharply and it was forced to match them, but he said the promise was vital to the company's success.

He told the BBC: "Absolutely it's costing us money, but it is really important we stick to it."

Long-term plans

Investment for the six months to the end of July rose by £99m from the same period last year to £254m on new systems, including expanding its own Waitrose delivery service, and improvements to the website.

John Lewis has invested £16m in its stores, opening new smaller convenience Waitrose stores as well as larger outlets.

It also opened its 33rd department store at Stratford, east London, opposite the 2012 Olympic site.

Mr Mayfield defended the investments, saying the business was there for the long term: "We expected our profits to be down in the first half because we are investing now, not just for this year, but for the next 10 or 20 years."

"We've done this before and it really paid dividends."

The Partnership is owned by its 76,500 staff, who receive a share of any profits at the end of the company's financial year.

Source : BBC News

14 September 2011
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