* John Lewis profit seen up 15 percent, staff bonus similar
* Morrison seen returning up to 1 bln stg to shareholders
* Morrison year profit seen up 12 pct, expansion plans key
* Home Retail Q4 sales fall seen cushioned by weak Q4 yr ago
By Mark Potter and James Davey
LONDON, March 4 (Reuters) - Big cash handouts from Wm Morrison for its shareholders, and John Lewis for its staff, could help to lift some of the gloom surrounding British retailers next week.
However, both are likely to join household goods group Home Retail in warning that trading has got tougher since a hike in VAT sales tax at the start of the year and further increases in the price of petrol and food.
Life may get harder still as shoppers worry about the prospect of higher interest rates and the safety of their jobs as the government slashes public spending to reduce its deficit.
Employee-owned John Lewis, which runs Britain's biggest department store by sales, has outperformed rivals for the past few years, helped by its strength among affluent consumers who coped better than lower income groups in the economic downturn.
But weekly sales figures suggest that even its customers are starting to spend more cautiously.
"It does appear that John Lewis sales have lost significant overall momentum in recent weeks, which is a worrying sign for consumer spending given that John Lewis has very much been an outperformer in the retail sector," said Howard Archer, chief UK and European economist at IHS Global Insight.
Arden Partners analyst Nick Bubb expects John Lewis, which also runs upmarket grocer Waitrose, to report on Wednesday a 15 percent rise in pretax profit to 352 million pounds ($573 million) for the year through January.
The 147-year-old group will also announce the annual bonus for its 70,000 employees, or "partners."
The payout rose 15 percent last year, following a year in which underlying profits climbed 10 percent. However, a cautious outlook may deter the group from increasing the bonus beyond the rate of earnings growth.
MORRISONS, HOME RETAIL
Morrison, Britain's fourth-biggest grocer, is expected to announce a plan to buy back up to 1 billion pounds of shares, as well as a more generous dividend policy, when it reports full-year results on Thursday.
Chief Executive Dalton Philips will be hoping the payout will keep shareholders on board as he pursues a series of tests aimed at tapping growth opportunities, such as online shopping, convenience stores and non-food ranges.
Handouts announced by Dutch grocer Ahold and France's Carrefour on Thursday, however, failed to win over investors worried about weak trading.
Oriel Securities analyst Jonathan Pritchard said the boost to earnings from a share buyback could be offset by the start-up costs of new ventures as Morrison tries to make up ground on larger rivals Tesco, Asda (part of Wal-Mart Stores Inc) and J Sainsbury, which have all diversified more quickly.
Analysts expect profit before tax and one-off items for the year through January to have risen 12 percent to 861 million pounds, according to the median forecast of 28 collected by Thomson Reuters I/B/E/S Estimates.
Growth in sales at stores open at least a year, excluding fuel and VAT sales tax, is likely to have slowed over the full fourth quarter from the 1 percent rise reported for the six weeks to Jan. 2.
Recent market share data, though, suggest Morrison had a good February.
Analysts expect Home Retail to report on Thursday a small fall in fourth-quarter underlying sales at its Argos chain.
That would be an improvement on a 4.9 percent decline in the third quarter, largely due to a weaker figure in the comparable period the year before, which was disrupted by snow.
Forecasts for underlying sales at the group's Homebase home improvement chain range from a small fall to a modest rise. (Editing by David Holmes) ($1=.6141 Pound)