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John Lewis: Trading conditions set to remain challenging
Sep '11
John Lewis Partnership plc announced Interim results for the half year ended 30 July 2011.

Charlie Mayfield, Chairman of the John Lewis Partnership commented:

'The Partnership has made good progress in the first half. Sales grew strongly although, as expected, profits were lower than in the same period in 2010 as we accelerated investment in our future growth plans, even though conditions remained extremely challenging.

The Partnership has always had a long-term outlook, and our business is stronger today because of it. We made significant investment in the first half and our capital expenditure increased by £99m to £254m.

Trading conditions are set to remain challenging through the rest of this year and into 2012. We are not simply waiting for the recovery, but instead we have increased the pace of investment and innovation across the Partnership putting us in the best possible position to seize the opportunity created by a rapidly changing retail environment. Our momentum is strong and I am confident we will build on that in the second half.'
Chairman's statement

The Partnership has made good progress in the first half. Sales grew strongly and, as expected, profits were lower than in the same period in 2010 as we accelerated investment in our growth plans. Our capital expenditure increased by £99m to £254m in the first half.

Sales in both Waitrose and John Lewis grew well ahead of their respective markets. Waitrose has now been the fastest growing supermarket for over two years and in John Lewis we gained market share in our three key areas of electrical and home technology (EHT), fashion and home.

We have often said we are a business with a long-term outlook. Our sales momentum today has much to do with decisions taken to invest during similarly difficult market conditions in 2008 and 2009. Our profit performance in the first half reflects not only the extremely challenging trading conditions, particularly in John Lewis, but also the significant investments we are making to accelerate growth and to seize the opportunities created by the structural shifts in how customers are shopping.

We accelerated our opening of new shops, with 16 new shops versus 9 last year, an increase of 220,000 square feet of new space.

We also accelerated our spending on systems and supply chain to increase our capacity to serve customers in the new ways they want to shop. In Waitrose we relaunched our online platform and will soon open a new customer fulfilment centre in Acton to support deliveries within the M25 and in John Lewis we added extra capacity for in-house picking and delivery of customer orders.

In the convenience market, we continued the roll-out of Little Waitrose with 8 more shops and 12 more planned in the second half, 2 more John Lewis at home shops planned for the second half and we will extend our popular Click and Collect service to 116 locations fromnext month.

In the face of increasing pressure on household budgets we increased our focus on offering value across all our ranges. In Waitrose we absorbed the majority of inflation within our prices, and in John Lewis, 'Never Knowingly Undersold' meant we met our promise to offer the best value both on the high street and online compared to 'bricks and mortar' competitors.

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John Lewis Partnership plc

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