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John Lewis forecasts less discounting at Christmas

John Lewis managing director Andy Street has forecast that there will be less high street discounting during the crucial festive period as the department store said that sales fell by 2.9% to £1.21bn over the first half.

Like-for-like sales at the retailer fell 4.7% in the first half to August 1. Operating profit, excluding property profit, was down 49% to £20.1m.

Street said the performance was better than expected and that the department store was bullish about the prospects for Christmas.

Street said: “I am expecting retailers will have their stock in balance with demand this year, so we will see less discounting.”

He added: “We see a strengthening of trade and we expect that the run-up to Christmas - in October and November - will be particularly strong so we need to keep on our feet. We expect to match last Christmas’ figures”.

Six weeks in to the second half like-for-like sales at the department store improved to a 1.3% decline.

Street said that sales at the department store over the first half were driven by a strong performance from fashion, which rose 2.2% over the first half.

Total online sales rose 11.6% to £151.5m over the half and the retailer has relaunched its fashion website with 200 brands. It will open its 28th store in Cardiff on September 24.

The retailer said gross margin “held up well despite continued price competition” and it is strengthening its price-matching offer - Never Knowingly Undersold.

The John Lewis Partnership, which also owns grocery arm Waitrose, posted a 19.6% slide in half-year profits to £86.3m from £107.3m a year earlier. Total group sales rose 3.5% to £3.39bn.

John Lewis Partnership chairman Charlie Mayfield said.”We believe that trading conditions this year will continue to be better than expected. However, 2010 may be difficult and we foresee a slow, drawn out economic recovery.

“Trading in the first six weeks has been encouraging and we are confident that the Partnership is well-placed to trade strongly and maintain momentum,” he said.

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