Retailers see tougher times ahead

John Lewis, the employee-owned retailer that runs department stores and upmarket grocer Waitrose, underscored its confidence by paying out a 151 million pound bonus worth 15 percent of salary to its 70,000 staff, or "partners."

Wm Morrison, Britain's fourth-biggest grocer, hiked its dividend to shareholders by 41 percent and unveiled plans to step up expansion over the next three years.

Despite the deepest recession in over 60 years, consumer spending has held up better than store groups expected this time last year, thanks to big interest rate cuts and government stimulus measures.

The British Retail Consortium on Tuesday said retail sales recovered in February from January's snow related slide, helped by strong sales of clothing and footwear.

But retailers fear trading could get tougher after a national election which is expected in May.

"The likely withdrawal of monetary stimulus, higher taxes, the possibility of increased interest rates and the implications of public spending cuts make for an uncertain outlook," said John Lewis Chairman Charlie Mayfield.

"We anticipate more challenging trading conditions in 2010, particularly in the second half of the year."

But the firm was confident of coping, however, having successfully adapted its offering to the times with its phenomenally successful "essentials" range at Waitrose and a "value" range at its department stores.

Profit before partnership bonus and tax rose 10 percent to 306.6 million pounds in the year ended January 30 on a 6.5 percent rise in sales to 7.4 billion.