Dixons to offload Spain operation

JOHN LEWIS, Britain’s largest department store chain, has seen a drop in demand for big ticket items as consumer confidence fades.

Shoppers are feeling the impact of subdued wage growth, concerns over Brexit, the outcome of the General Election, the recent terror attacks and creeping inflation. Recent surveys have shown a sharp drop in consumer confidence.

John Lewis’s managing director, Paula Nickolds, said: “The backdrop is very uncertain and it was made worse by the tragic events that happened across British cities over the last few months.

“Customers feel uncertain and worried about what the circumstances will mean for their future financial prosperity. It’s the more considered categories, the arguably deferrable spend, that we’re seeing most affected by the uncertainty in the macro conditions – so those big ticket categories are currently trading just behind last year.”

Ms Nickolds, a 23-year John Lewis veteran and the first woman to run the 152-year-old employee-owned chain, succeeded Andy Street as managing director in January.

Mr Street, managing director for a decade, quit the post to contest the election of mayor of the West Midlands for the Conservative Party. He won in May.

Ms Nickolds said the John Lewis customer is not immune despite the fact that John Lewis is seen as attracting wealthier customers than its rivals.

“I would have preferred to start my first year as managing director of John Lewis in slightly more benign conditions,” said Ms Nickolds, highlighting the squeeze on consumers’ disposable income, the inconclusive General Election and concerns over Britain’s exit from the European Union.

However, she said that trading in spontaneous categories, such as beauty, is holding up as people cheer themselves up with affordable pick-me-ups. Beauty sales rose 7 per cent on last year and womenswear sales are up 4.4 per cent.

“We believe those (numbers) to be significantly ahead of the market,” she said.

“Perhaps the lipstick effect as we might have called it back in the recession.”

John Lewis typically makes more than 40 per cent of its annual profit in the five weeks that run into Christmas.

“So there is still all to play for,” said Ms Nickolds.

John Lewis said sales rose 1.2 per cent in the 23 weeks to July 8, which analysts estimate equates to a like-for-like sales fall of about 0.5 per cent.

Earlier this year John Lewis warned of “turbulent and challenging” times ahead and predicted there will be casualties on the high street as Britain prepares to leave the EU.

Ms Nickolds said that John Lewis is adapting to the challenges and we could see more products being made in the UK to avoid higher import charges following the collapse in sterling after the referendum vote.

Retailers face an unprecedented combination of rising inflation, higher import prices, lower wage growth and Brexit uncertainty.

Fashion chain Next said prices will rise by 4 per cent this year.

Electricals giant Dixons Carphone is to offload its Spanish operation for 55 million euros (£48m).

The group said it will sell The Phone House Spain, Connected World Services Europe and Smarthouse to Global Dominion Access. The deal is expected to complete by the end of the second quarter and proceeds will be reinvested into the business, Dixons Carphone said yesterday.