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John Lewis to delay VAT increase

Department store retailer John Lewis may steal a march on the rest of the high street by holding off passing on the higher rate of VAT until the end of January.

The VAT rate is expected to revert from 15% to 17.5% on January 1, but according to the Financial Times, John Lewis managing director Andy Street said the retailer did not expect to raise its prices until four weeks later.

If the retailer does hold off, the increased prices would come into affect at the end of January, meaning that the John Lewis clearance Sale would still be at the lower rate.

Street said that the retailer’s price promise ‘Never Knowingly Undersold’ meant that that it could not increase prices until other retailers had done so.

The decision by John Lewis to hold off on passing on the increase in VAT will eat into profits as retailers compete for crucial sales during the new year period, but Street said he hoped the decision would help win customer support.

Elsewhere in the market Marks & Spencer has said it will pass the increase on immediately.

Sainsbury’s boss Justin King refused to be drawn on the supermarkets plans regarding the VAT increase, but said as the increase was, “planned for slap bang in the middle of Sales, I would be surprised if we saw prices immediately pop-up on January 1 in the market.”

 

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