John Lewis remains beacon of hope in the retail sector

The employee-owned business, which has been outperforming competitors for more than a year, said that sales at its 32 department stores increased 2.6 per cent to £53.4m in the week to August 20.

Sales excluding VAT sales tax increased 1 per cent.

“Against a background of the country returning to post-unrest normality, media reports of falling disposable incomes, extraordinary turbulence in the financial markets and changeable weather, it was encouraging to see sales perform creditably again,” the 147-year-old firm said.

John Lewis said key to its resilient trading was the performance of its online business, which saw sales growth of 33 per cent.

Its Oxford Street store was the top performing branch, with a sales rise of 5.2 per cent, followed by Solihull and Glasgow.

Electrical and home technology sales were up 7.7 per cent, with tablets out-selling desktop PCs for the first time, while fashion sales were up 4.4 per cent with new brands driving much of the growth, and home sales down 1.7 per cent.

Consumers are grappling with rising prices, subdued wage growth, a lack of credit, job insecurity, a stagnant housing market, government austerity measures and fears of eventual interest rate rises.

Analysts fear riots in several cities this month and a sharp decline in the stock market will have a further negative impact on sentiment.

Retail sales fell in August at the fastest pace in over a year, a CBI survey showed this week, while building society Nationwide said consumer confidence edged down further in July – more signs that subdued consumption will remain a major drag on the fragile economic recovery.

The John Lewis figures come a day after The Co-operative retailer reported a 10 per cent decline in half-year underlying profits and its boss Peter Marks said conditions were the worst he had known in 40 years.

Kate Calvert, a retail analyst at Seymour Pierce stockbrokers, said it had been an encouraging week for the chain given the “doom and gloom”.