John Lewis sales plunge by 8% as gloom deepens

John Lewis today became the latest major high street casualty of the credit crunch with an eight per cent fall in sales.

The department store chain said its tills took in £53.01 million in the last week of June, sharply down from £57.79 million last year. The admission comes two days after a shock trading warning from Marks & Spencer, which has seen sales fall by five per cent followed by a huge drop in its share price.

John Lewis, which as a partnership does not have shares quoted on the stock market, said: "Taking a full week's perspective, there is no doubt that trade in our shops proved challenging-when compared to exceptional results last year." Many of its worst performing stores are in the London area.

Sales at the Bluewater shopping mall were almost 25 per cent lower than a year ago. Peter Jones in Sloane Square, which has been badly hit by the bonus and jobs slump in the City, was 16.4 per cent down, while the Brent Cross branch suffered a 17 per cent slide.

However, at the flagship outlet in Oxford Street, which has had a £60 million refurbishment, sales rose

5.6 per cent. The figures only cover a single week but it is the seventh time in the past eight weeks they have dropped and will add to gloom over the economy.

In total, the retail sector has lost £4 billion in value. M&S shares were down another four per cent today after the company's own broker Citigroup said it was changing its recommendation from buy to sell because of the "sharply deteriorating UK macro environment".

M&S chairman and chief executive Sir Stuart Rose is likely to face intense questioning from shareholders at the group's AGM next Friday.

Some City commentators are saying the man credited with rescuing the chain four years ago should be ousted if the shares continue to fall.

There is little sign of respite for consumers as the Bank of England is expected to leave base rates at five per cent when its Monetary Policy Committee meets next week. With inflation at 3.3 per cent and expected to go over four per cent during the summer there is little scope for the Bank to manoeuvre.

Research from consultants Ernst & Young today suggests the average household is 15 per cent worse off than five years ago.