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Last Updated:  Thursday, 6 March, 2003, 15:35 GMT
Rare profits boost for John Lewis
John Lewis store on Oxford Street
Oxford St is less busy than usual
The retailer John Lewis has reported its first rise in annual profits for five years, but warned it could be hit by a slowdown in consumer spending.

The group - operator of the John Lewis department stores and Waitrose supermarket chain - said it was planning to open more food stores and may also bid for any Safeway outlets that become available in the supermarket's takeover battle.

Finance director Ian Alexander said shopping habits were being affected by concerns about the general economy.

And while food spending has remained resilient, the group's department stores are struggling to keep up.

Shoppers' caution

John Lewis reported profits up 3% in the year to 25 January - a clear reversal of its position six months ago when profits were down 23%.

Consumers are not immune from worries about the economic situation generally and the international situation
Ian Alexander, John Lewis finance director

The 140-year old firm said sales had continued to rise since January, but with a stark difference between its two chains.

Waitrose food sales have jumped 8% so far this year, while those in its department stores have stayed flat.

The group said its flagship Oxford Street shop had been hit hard by the closure of the Central Line tube since January, which has stopped shoppers heading into the Britain's busiest shopping street.

Mr Alexander added that current worries about a possible war and a slowdown in the economy were weighing heavily on shoppers.

"Consumers are not immune from worries about the economic situation generally and the international situation and basically spending in our shops runs in line with consumer spending."

Keep eating

In the year to January, same-store sales in both Waitrose and John Lewis - sales in shops that have been open for a year or more - rose by 4% and the group said it would invest more money this year in revamping its shops.

Safeway store
Safeway is up for sale

The retailer is also planning to take advantage of the current bidding war for the Safeway supermarket chain.

The group is being circled by a number of rivals, including Asda's parent Wal-Mart, Sainsbury's and Tesco.

But any bidder is likely to have to get rid of some stores to meet Competition Commission requirements.

"And if they were in the right place and at the right price, we would be interested," said Mr Alexander.

Staff bonus

John Lewis is a partnership, run by a trust that shares profits with its 60,000 employees.

The group said staff were in line to receive a bonus equivalent to 10% of their salary, up from 9% the year before.

John Lewis is also one of the few firms to have kept its final salary pension scheme, although it has increased the amount of time new staff have to work before they can join.

The scheme has not been immune from the tumbling stock market and John Lewis said its pension fund deficit had increased to 302m.

But the firm insisted it would not need to make big increases in its contributions to the fund following its review of the scheme last year.

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