Despite a sales rise in the Christmas trading period, the John Lewis Partnership has issued a profit warning for the full year as the pressure on margin seen in the first half has intensified.
In its Christmas trading statement today (11 January), the Partnership said gross sales were up 2.5% versus last year to GBP1.96bn (US$2.64bn) in the six weeks to 30 December.
John Lewis gross sales meanwhile, were GBP1.03bn, up 3.6% on last year and 3.1% on a like-for-like basis and “significantly” outperformed the market by 4.5%.
The Partnership added Black Friday was John Lewis’s most successful sales day in its history and contributed to the biggest ever week of sales, up 7.2% year-on-year, while there was a “particularly good performance” in its fashion division with sales up 5% in the period.
Sir Charlie Mayfield, chairman of the John Lewis Partnership, said the group traded well during the Christmas period but the pressure on margin seen in the first half of the year has intensified because of its choice to maintain competitive prices, despite higher costs mainly due to the weaker exchange rate. “This will negatively affect full-year financial results as indicated previously,” Mayfield added.
Looking ahead to 2018/19, he said the Partnership expects trading to be volatile due to the economic environment but is well placed to continue building the strength of its two leading brands.
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By GlobalDataEmily Stella, senior retail analyst at GlobalData, notes amid “disastrous” Christmas results from mid-market competitors Debenhams, House of Fraser and M&S, John Lewis has revealed a very strong performance.
She adds: “Although John Lewis has outperformed its competitors, and the market as a whole, the retailer is not immune to the challenges that face all bricks-and-mortar retailers: a shift to online and reluctance among consumers to pay full price – for anything. To retain its reputable position, John Lewis must bring newness and innovation across all its categories, as well as engage consumers through services and a premium instore experience.”
