The John Lewis Partnership, which runs John Lewis department stores and Waitrose supermarkets, reported strong sales in its first half despite adverse market conditions and said it expects better to come.

The employee-owned company reported underlying pre-tax profit of £115.8m ($182.5m, €137.5m) for the six months to 27 July, up 3.9% year-on-year. After taking into account a payment of £40m to staff following the miscalculation of holiday pay over the past seven years, net profit fell 38.5% to £68.5m.

Half-year sales increased 7.3% to £4.7bn, despite comparisons with strong trading last year.

"The Partnership has had a strong first half with sales up 7.3% and profit before exceptionals up by 3.9%, slightly ahead of our expectations due to a good trading performance in both businesses," Charlie Mayfield, chairman of JLP, said.

"Both Waitrose and John Lewis again increased their market shares significantly during the first half. Year-on-year, we grew our customer numbers by 6%, helped especially by initiatives such as myWaitrose and our market leading omni-channel offer in John Lewis."

Waitrose had outperformed the sector for more than four years and it currently has a market share of 4.9%, up 0.3% from a year ago, according to the group. Its sales in the first half rose by 7.8% to £3bn, with a 6.9% increase in like-for-like sales, while operating profits climbed 12.8% to £160.2m.

Gross sales at John Lewis were up 6.6% to £1.7bn, with like-for-like sales increasing by 5.1%. The segment's operating profit declined by 23.9% to £34.7m.

'Quiet Revolution'

"Looking ahead, I'm encouraged by progress this year and am confident of the plans we have in place for Christmas. Despite a strong second half last year, both during the Olympics and at Christmas, I expect us to trade positively in the second half," Mayfield said.

During the first six weeks of the second half, group gross sales are 5.3% higher than last year, the company said. Waitrose gross sales have risen by 4.8% and John Lewis gross sales are 6.2% higher than last year.

The partnership added that it has made further progress to its "quiet revolution" programme that focuses on the investment and restrictions in retail operations, the supply chain, IT and support functions.