* Next H1 profit up 8.2 pct to 272 mln stg
* Morrisons H1 profit down 10 pct to 401 mln stg
* John Lewis H1 profit up 3.9 pct to 116 mln stg
* Argos Q3 like-for-like sales up 2.7 pct, Homebase up 11
* Ocado Q3 sales up 16.4 pct
By James Davey
LONDON, Sept 12 Some of Britain's biggest
retailers on Thursday cast doubt over signs of economic
recovery, saying consumer spending - the largest engine of
growth - was likely to remain subdued until wages rise ahead of
inflation, which could be over a year away.
Next, Britain's No. 2 clothing retailer, Wm Morrison
Supermarkets, the nation's No. 4 grocer, and Home Retail
, its largest household goods retailer, said early
indications of a recovery, such as a pick up in lending by
banks, were yet to have an impact on consumers' wallets.
"For most people - and we've got 12 million customers - at
the end of the month there's no more money in their pocket,"
Morrisons Chief Executive Dalton Philips told reporters, noting
that higher levels of spending in the London area were not
indicative of the rest of the country.
Next CEO Simon Wolfson, a prominent supporter of Britain's
ruling Conservative Party who sits in the upper house of
Parliament, was similarly downbeat.
"While there is some relief in the economy, I think it would
be a mistake to characterise that as a full blown recovery
because a recovery will require growth in real earnings not just
more borrowing," he told Reuters.
He reckons a return to earnings growth ahead of inflation
will take at least a year and warned a loosening of the mortgage
market alongside government housing market stimulus measures
looked likely to result in an "unhelpful house price bubble",
which would be a drag on the economy when interest rates rise.
On Monday, British finance minister George Osborne said the
UK economy had turned the corner and that its growth vindicated
the government's austerity programme.
However, on Thursday Bank of England Governor Mark Carney
warned signs of recovery could prove to be another "false dawn."
Morrisons reported a 10 percent drop in first-half profits,
hit by its late entry into fast-growing online and convenience
store markets. It also cut capital expenditure guidance to
reflect a shift in investment to the new channels and away from
traditional stores, and kicked-off a review of its 9 billion
pounds ($14.2 billion) property portfolio, which could
potentially raise some money for shareholders.
Though it is budgeting for "no significant change to the
challenging economic environment in the near future," it expects
a better second-half performance and a full-year outcome in line
with expectations. Morrisons shares rose up to 5 percent.
Next posted an 8.2 percent increase in first-half profit but
was reliant on a strong performance from its Directory internet
business to offset sales falls in traditional stores - a growing
theme across Britain's retail sector. It maintained its guidance
for full-year sales growth of 1.5-3.5 percent.
While official data and surveys have shown an improving
outlook for UK consumer spending, which generates about
two-thirds of gross domestic product, retailers remain
J Sainsbury, Britain's No. 3 grocer, and B&Q owner
Kingfisher, the No. 1 home improvement group, both said
this week it was too early to call a UK recovery, with
Sainsbury's describing strong trading across the grocery
industry in the summer as "a blip" due to helpfully hot
Also on Thursday, Home Retail posted weather-assisted
second-quarter underlying sales rises of 2.7 percent and 11
percent at its Argos and Homebase businesses respectively, but
was still cautious. "We continue to expect consumer spending to
remain subdued," said CEO Terry Duddy.
Employee-owned John Lewis, which runs department
stores and the upmarket Waitrose grocery chain and has a bias to
the more-affluent south east of England, posted a 4 percent rise
in first-half profit and said it expected to trade positively in
the second half.
"What we're definitely not seeing is a return to what I
would describe as conspicuous consumption," said Andy Street,
managing director of the department stores division.
Elsewhere, online grocer Ocado, which struck a
joint venture deal with Morrisons in May, reported a 16.4
percent rise in third quarter sales in line with expectations,
while home furnishings retailer Dunelm, posted a 12.3
percent rise in full-year profit.