How have you done in the half?

We’ve had a good half. Our sales are up 6.5%.
Our profit before tax is up nearly 12%. Earnings per share is up 15%. So we’re very pleased with the financial results. I think more importantly, however, we’ve taken the business forward. So we’ve now got 70% of our space modernised. We’re ahead of where we thought we’d be as far as our property strategy is concerned. We’ve made
progress in Direct, and we’re also building the International business. So all in all, we thought we had a good half.

And what about the second quarter?

I think in quarter two, again, our performance was pretty good in the circumstances. We grew sales by 5.4%. In GM we held market share. In food, we grew market share. And given market conditions, and the fact we had a lot of our stores being disrupted, we were pretty pleased with the performance in the second quarter.

And what does it feel like right now? What does the current trading look like? And are we seeing a slowdown in growth?

I think market conditions are quite difficult at the moment and we’re certainly seeing a degree of pressure on consumer spending. But I think the critical thing is that we’ve got more space coming on line. We’re very confident about our products. So we feel that we’re very well set up to deliver in the third quarter and also through to 2008 and beyond.

And at this point of the year, in the past, we’ve seen some distress discounting. What’s happening on markdowns this time around?

If you look at our first half, our markdowns are slightly higher than they were last year. But given the market circumstances, we felt that was a pretty good effort. We thought we’d controlled our stock pretty well.

What you’re seeing in the market at the moment is a degree of discounting, but again, we feel that we’ve got our stocks under control, and we’re happy with our full-price stance.

So will a lot of this new spending be on store modernisations or new space?

As far as space and the stores are concerned, considering the modernisation programme, there’s no step-up in spending there. It’s exactly what we said we would spend on the modernisation programme. It’s just a question of completing that over the next couple of years.

So the increase in spending really is about the faster pace of our property strategy; we’re finding more and more opportunities to invest.

So these are big plans for expansion. Can you manage all of this?

Yes. We’re absolutely clear that we wouldn’t be announcing this if we didn’t have absolute confidence in our ability to be able to deliver all of it.

And how will it all be financed?

Initially, it will be financed out of existing resources. In due course, we may seek to raise additional finance in the markets.

For the full interview and more FD, CFO and CEO online programming go to www.cantos.com