Warning of 'spending fatigue' by John Lewis

John Lewis, the department store group, yesterday reported below-budget figures and warned of potential "spending fatigue" among consumers. The comments follow an unexpected fall in the official retail sales figures for December, announced last week, and fuel hopes of further cuts in interest rates.

John Lewis said that in the week to 19 January its department store sales were up just 4.7 per cent on the previous year. This is half the group's sales target of a 9.4 per cent increase. Nigel Brotherton, its administration director, said: "Reports from branches suggest that, with Christmas and clearance [the winter sale] now past, there may be a degree of spending fatigue. We must hope that this does not herald a more prolonged slackening of pace in trade."

John Lewis, headed by the chairman Sir Stuart Hampson, said it was normal for trade to fall back after the end of the winter sale but the effect "was sharper than usual on this occasion".

Some analysts said the drop showed that consumer spending was not as buoyant as previously thought. Nick Bubb, a retail analyst at SG Securities, said: "There is some evidence that January has been slow and that Christmas was overhyped. It would encourage us to think the Monetary Policy Committee might do the decent thing and cut rates." However, other observers said there may be different reasons for the slowdown. Matthew McEachran, at Investec Henderson Crosthwaite, said: "There has been a moderation of consumer spending. But that could be due to there being not as much sale stock around in January because of strong December trading." He said trading could improve once all the stores had their new spring ranges in stock.

Other evidence of a January slowdown came earlier this week with figures showing a fall in the number of visitors to shopping centres. Footfall Index, which compiles data from 50 UK shopping centres, said visitor numbers in the week starting 14 January were down 9.4 per cent on the same week last year.