John Lewis to beat forecasts as middle-class escape cuts

John Lewis today predicted it would beat its 4% sales growth forecasts for the current half-year, declaring its core, middle-income shoppers will be less hurt by the Government's spending review than first feared.

Retail director Andrew Murphy said the balance between spending cuts and tax rises meant his customers could still afford to shop.

Half-year sales could even beat 6%, he added. "I wouldn't entirely rule out an upside on that. Whatever UK retail Plc comes out with, we will come out right at the top end of that," Murphy said.

"We're going to outperform the market, probably outperform some of our competitors by some distance."

Since predicting 4% sales growth in September, when John Lewis reported a 28% rise in first-half profit, the firm has delivered like-for-like sales growth of about 10% for its third quarter.

Murphy said John Lewis' past experience was that tax rises had more impact in the short term than government spending cuts.

He said the impact of public sector job losses on demand would start to be felt next year and would vary significantly across different regions, with Southampton, Glasgow, Newcastle, Cardiff and Liverpool expected to be hit hard.

Murphy said the chain was anticipating like-for-like sales growth of between one and 2%, excluding VAT sales tax, for 2011.

He added that total sales growth would be boosted by the opening of at least four "at home" homeware stores, as well as the addition of more products online.

"We are looking at like-for-like growth but at a pretty modest level ... We think there's a minimal risk of our growth stalling," Murphy said.