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John Lewis profits increase again

John Lewis department stores have racked up another big jump in profits as they offset a much weaker performance from Waitrose supermarkets.

The retail businesses are both part of the John Lewis Partnership , which lifted profits by 12.1% to £129.8 million for the six months to July 26.

Operating profits in John Lewis department stores rose by 62% to £56.3 million in the period, helped by strong growth in the higher margin home category and a continued surge in online sales.

At Waitrose, profits fell 9% to £145.2 million as a result of higher investment in branches and the impact of challenging trading conditions.

The supermarket, which has been matching Tesco's prices on branded products as well as Sainsbury's on own-label items, said it outperformed the market over the period.

Partnership chairman Sir Charlie Mayfield said: "The outlook in the grocery sector remains challenging and we expect that to continue to be the case for some time.

"In contrast, trading conditions in the non-food sector are more positive than has been the case for several years."

In the first six weeks of the second half, Waitrose sales are ahead by 0.9% on a like-for-like basis, with the figure for the department stores up 9.7%.

The group operates 42 John Lewis shops - 31 department stores, 10 John Lewis at Home and a shop at Heathrow Terminal 2. Waitrose has 326 shops including 51 convenience stores and another 28 shops at Welcome Break locations.

Waitrose opened 15 new branches in the half-year period, compared with four for the same period a year earlier. Sales were 4.1% higher at £3.15 billion after a rise of 1.3% on a like-for-like basis.

John Lewis said: "The decline in profit was mainly as a result of the substantial levels of investment made across the business and, to a lesser extent, the tough market conditions."

It added that being employee-owned allowed it to take a long-term view about the level of investment required for the business.

John Lewis said department store sales were up 9.4% to £1.87 billion in the half-year, with the figure on a same-store basis ahead 8.2%.

Home sales were 7.4% higher, while fashion was up 9.1% and electricals and technology delivered growth of 11.7%.

Neil Saunders, managing director of retail consultancy Conlumino, said: " If the John Lewis Partnership were a listed company then it would be the gift that keeps on giving.

"However, if JLP were listed then the results would most likely be very different - for its continued success is underpinned by its capability and willingness to play the long game, even when that means some short-term pain."

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