Some of Britain's biggest retailers sent out a warning to smaller and weaker rivals today, saying their scale and cost-cutting potential would help them to cope better with a worsening consumer outlook.
John Lewis, the employee-owned group often seen as a bellwether of British retail spending, said it expected steps to rein in government debt, like higher taxes and public spending cuts, to hit British consumers in the months ahead.
But it was confident its department stores and upmarket grocery chain Waitrose would take more market share after a 28% jump in first-half profit.
Kingfisher, Europe's number one home improvements group, said its ability to cope was underscored by a forecast-beating 23% rise in first-half profit, while electricals group Kesa said demand for TVs ahead of the soccer World Cup boosted first-quarter sales.
Both Kingfisher and Kesa, which run the B&Q and Comet chains in Britain respectively, also benefit from large businesses in France, where consumer spending has been more stable.
Britain's shopkeepers are worried that austerity measures could derail a fragile economic recovery in the months ahead.
'For the remainder of this year and into 2011, we anticipate more challenging trading conditions,' said John Lewis Chairman Charlie Mayfield, echoing comments from across the sector.
John Lewis is reaping the benefits, however, from investments which have continued throughout the recession, such as in its online business and in new formats for Waitrose like convenience stores, which have helped it outperform competitors.
Pre-tax profits climbed to £111.2m in the six months ended July 31, and sales were up 9.9% in the first six weeks of the second half. 'Despite the economic headwinds, and tougher comparables in the second half, we remain confident that both Waitrose and John Lewis will continue to grow ahead of the market,' Mayfield said.
Kingfisher said it was also benefiting from investments in new products, such as a space-saving eco-toilet with a built-in washbasin, as well as its drive to buy more products centrally, and directly, from cheaper manufacturing centres like China. Its profit before tax and one-off items reached £354m in the six months ended July 31.
This resilience was echoed by homewares chain Dunelm, which said market share gains helped to fuel a 46% jump in annual profit to £76.8m, and was also a theme of results earlier in the week.
Clothing chain Next posted a 15% rise in first-half profit yesterday, while department store group Debenhams said the day before its full-year profits would top expectations and fashion company SuperGroup reported soaring sales.
Discount clothes chain Primark sparked some jitters on Monday, though, by flagging a slowdown in sales growth and a hit to margins from higher cotton prices.
