Lewis sees VAT starting to take toll

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DEPARTMENT store chain John Lewis suffered a decline in sales last week, adding to evidence that an increase in VAT sales tax has further weakened already fragile UK consumer spending.

The employee-owned retailer, which also runs grocery chain Waitrose, yesterday said department store sales fell 2.2 per cent to £50.1m in the week to January 22. Sales at its Sheffield store fell 11.3 per cent. Sales in the previous two weeks had increased 4.1 per cent and 38.7 per cent respectively.

“It was a quieter week for John Lewis but the comparisons against last year are difficult to read due to heavy snowfall in the first week of January last year and the resulting uplift in trade over the following two weeks,” the retailer said.

It said taking the week ending January 15 and the week ending January 22 together provides a more realistic comparison with last year, giving an overall increase of one per cent.

“The John Lewis figures suggest consumers are becoming increasingly less prepared, or less able, to spend as higher inflation and muted earnings growth squeezes purchasing power,” said IHS Global Insight economist Howard Archer.

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