John Lewis of Hungerford

Kitchen designer and maker John Lewis of Hungerford’s second half financials may have shown improvement, but the outlook for the Oxfordshire-headquartered concern remains cloudy at best.

Overall, annual numbers to August from John Lewis, which sells its wares, including the ‘Artisan’ kitchen and furniture range, from its own showrooms as well as via company managed concessions, were poor, with pre-tax losses widening from £91,000 to £332,000.

In line with recession-hit kitchen industry competitors, John Lewis experienced a tough first half, typified by a disappointing winter selling season. However, as management had predicted, a better second half was had. And so whilst full year revenue reduced by 11% to £4.1m (2008: £4.6m), this was a lesser rate of decline than the 25% turnover retreat reported at the interim and second half sales were actually 2% up year-on-year at the best part of £2.5m.

Furthermore, this full year loss was better than the £509,000 deficit declared at the interim, reflecting the benefits of cost cutting, gross margin expansion and the £177,000 profit achieved in the second half. In another encouraging sign, John Lewis' year-end order book was 25% ahead of the previous year, reflecting a strong summer sale and ‘improving trends’ in consumer confidence. Drawing some confidence from its superior second half, John Lewis has since gone on to introduce new ranges into its showrooms and has even restarted its search for new showrooms.

Nevertheless, despite recent financial improvements, the outlook for consumer spending in 2010 is still highly uncertain and with almost £71,000 of cash having exited the business last year, this tiny retailer is best avoided for the time being.