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Aug 7, 2009
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John Lewis sales get 'staycation' fillip

By
Reuters
Published
Aug 7, 2009

LONDON, Aug 7 (Reuters) - John Lewis [JLP.UL], the employee-owned group viewed as a barometer of British retail spending, posted a third consecutive big rise in weekly sales at its department stores, boosted by the "staycation" phenomenon.

John Lewis

The group, which also runs the upmarket Waitrose supermarket chain, said on Friday 7 August sales at its 27 department stores rose 5.6 year-on-year to 50.0 million pounds ($83.81 million) in the week to Aug. 1.

That followed rises of 6.3 percent and 5.3 percent in the two previous weeks as more British consumers holidayed in the UK or stayed at home rather than embark on foreign travels.

"A combination of encouraging response to our new ranges, increased footfall as a result of the 'staycation' factor and our shoppers finding the weather a little more mixed than they would have liked meant strong results across the board," John Lewis said.

The firm's figures will add to hopes the British economy is moving closer to recovery.

"Their recent improved performance boosts hopes and expectations that the economy will achieve modest growth in the third quarter after five quarters of overall very sharp contraction," said Howard Archer, chief economist at IHS Global Insight.

"With sharply reduced mortgage payments, lower utility bills and retreating inflation boosting purchasing power, it seems that a good many people are currently more able and more willing to step up their discretionary spending."

A raft of British retailers, from home improvements group Kingfisher (KGF.L) and fashion chain Next (NXT.L) to grocer Morrison (MRW.L) and carpet seller Carpetright (CATVU.L) have reported better-than-expected trading in recent weeks, raising hopes of a rapid recovery from recession.

A survey on Wednesday 5 August from the Nationwide Building Society said consumer confidence edged up in July.

However, many retail analysts remain cautious as unemployment is still rising, VAT sales tax and mortgage rates are likely to rise next year and the impact of swine flu on consumer behaviour is uncertain.

John Lewis said sales of home-related products rose 10.5 percent, which suggests the recent modest pick up in housing market activity is having a positive impact on sales of home furnishings.

Fashion sales increased 8.2 percent but sales of electricals and home technology were down 1.9 percent.

Sales at the 213-store Waitrose chain increased 9.5 percent year-on-year to 82.5 million pounds. ($1=.5966 Pound) (Reporting by James Davey; Editing by Hans Peters)

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