John Lewis, the department store chain that boasts of being "never knowingly undersold", today went into the realms of hard sell as it warned of the worst retailing conditions since the 1980s.

Profits at John Lewis dropped by 20 per cent, as the chairman Sir Stuart Hampson, said declines in non-food retail sales were hitting the department stores hardest.

The retail co-operative said pre-tax profit fell 3 per cent to £78 million in the six months to July 30. Worse, the retailer said it could not see any improvement in trading conditions in the coming months.

"The first half-year outturn for John Lewis has always been of less significance for the Partnership's full-year result than the second half, but we do not expect any improvement in the market in this period," it said.

The only bright spot was the performance of its supermarket chain, Waitrose, which, following some store acquisitions from Morrisons, saw a 17 per cent improvement on last year. Its online outlet, Ocado, had also experienced significant growth, with weekly orders up 50 per cent year on year, albeit from a low starting base.

Overall, sales were up 10 per cent to £2.7 billion, but its department stores bore the brunt of the slowdown in the growth of consumer spending. There had been a marked effect following the July 7 bombings in London, the company noted. Like-for-like sales in department stores fell 1.5 per cent -- a more resilient performance than seen from competitors, it said.

Like-for-like sales at Waitrose rose a market-beating 4.4 per cent, as total sales rose 18 per cent to £1.6 billion.

"There's been plenty of recent comment that high street trading over the last six months has been the worst in 15 years," Sir Stuart said. "I'd certainly agree with that - particularly the severity of the downturn for non-food retail spending."

The John Lewis Partnership is Britain's largest example of worker co-ownership. In March, its 63,000 permanent staff - all of whom are co-owners in the business - received an annual bonus equivalent to more than seven weeks' pay.

The partnership currently operates 27 John Lewis department stores and 167 Waitrose supermarkets following the acquisition of a number of stores from Morrisons.

Meanwhile, troubled fashion and homewares retailer Laura Ashley continues to struggle. Total UK sales were down by 15.6 per cent. Like-for like sales also fell 11.8 per cent and the group reported a pre-tax loss of £400,000.

Chief executive Lillian Tan said: "Although we go into the second half with our business in better shape than before, market conditions on the UK high street remain extremely difficult. Our performance will depend upon how consumer confidence progresses in the coming months."

At the beginning of the year, Laura Ashley, majority owned by Malaysian entrepreneur Dr Khoo Kay Peng, parted company with its 10th chief executive in 14 years.

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