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John Lewis chief fears Brexit effects on sterling John Lewis chief fears Brexit effects on sterling
(35 minutes later)
The head of John Lewis has warned that the plunge in sterling could become a problem for the department store chain.The head of John Lewis has warned that the plunge in sterling could become a problem for the department store chain.
Andy Street said that although the firm is “fully hedged” against currency fluctuations for 2016-17, next year it could become an issue.Andy Street said that although the firm is “fully hedged” against currency fluctuations for 2016-17, next year it could become an issue.
The managing director said: “The big issue is the decline in exchange rates. We hedged this year but the issue is next year, it will have an effect. If inflation gets into value chain, it will feed through.”The managing director said: “The big issue is the decline in exchange rates. We hedged this year but the issue is next year, it will have an effect. If inflation gets into value chain, it will feed through.”
Since the EU referendum result, sterling has collapsed against both the dollar and the euro. The pound was trading around $1.29 and €1.16 on Friday morning. In July 2015, £1 was worth $1.56 and €1.44.Since the EU referendum result, sterling has collapsed against both the dollar and the euro. The pound was trading around $1.29 and €1.16 on Friday morning. In July 2015, £1 was worth $1.56 and €1.44.
John Lewis has recorded a slowdown in sales growth after Britain’s decision to leave the EU.John Lewis has recorded a slowdown in sales growth after Britain’s decision to leave the EU.
However, Street said that had more to do with an earlier start to its summer clearance sale and the weather than Brexit. “The market has been challenging even before Brexit. Since the result, there’s been no implication for sales.”However, Street said that had more to do with an earlier start to its summer clearance sale and the weather than Brexit. “The market has been challenging even before Brexit. Since the result, there’s been no implication for sales.”
Street said his major concern is the potential reduction in the growth of consumer spending as the economy looks set to fall into recession.Street said his major concern is the potential reduction in the growth of consumer spending as the economy looks set to fall into recession.
“For us to start being concerned, the obvious thing for us is a reduction in the growth in consumer spending. But has it actually changed behaviour? It’s just far too soon to say.”“For us to start being concerned, the obvious thing for us is a reduction in the growth in consumer spending. But has it actually changed behaviour? It’s just far too soon to say.”
His comments come as GfK showed consumer confidence fell at the fastest pace in 22 years after the referendum.His comments come as GfK showed consumer confidence fell at the fastest pace in 22 years after the referendum.
Street called for a swift resolution to Britain’s trade relationships with Europe and the rest of the world and clarity on the status of Europeans living and working in Britain.Street called for a swift resolution to Britain’s trade relationships with Europe and the rest of the world and clarity on the status of Europeans living and working in Britain.
“At the moment this is a political crisis, it’s not an economic crisis. But one could turn into the other if not properly handled. We need to know the solution to terms of trade and want it done as soon as possible.”“At the moment this is a political crisis, it’s not an economic crisis. But one could turn into the other if not properly handled. We need to know the solution to terms of trade and want it done as soon as possible.”
He also dismissed reports that he is planning to run for political office – as the West Midlands’ first elected mayor on a Conservative Party ticket – as “speculation”. He also dismissed as “speculation” reports that he is planning to run for political office – as the West Midlands’ first elected mayor on a Conservative party ticket.