The John Lewis Partnership has reported a rise in both revenue and like-for-like sales over the Christmas trading period, but not enough to offset a warning from chairman Sir Charlie Mayfield that annual profits are set to be “substantially” lower this year.
The group said in a trading statement today (10 January) that gross sales at its John Lewis & Partners department stores were GBP1.16bn (US$bn) in the seven weeks to 5 January, up 2.5% versus last year and up 1% on a like-for-like basis – outperforming the market by 2%.
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Gross sales at the John Lewis Partnership, meanwhile – which includes the Waitrose supermarkets – were up 1.4% versus last year to GBP2.21bn.
The company said the trading period was defined by a longer Black Friday promotion – which contributed to the biggest sales week in John Lewis & Partners’ history – a very strong week running into Christmas including a record Christmas Eve in shops, as customers took advantage of the full shopping weekend, and an encouraging first week of clearance.
Like-for-like sales grew by 1% in the period overall, with particularly positive performances in fashion up 6.8%, with stand-outs in beauty up 11.2% and own-brand womenswear up 14.7%.
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However, Mayfield said gross margins remained under pressure in what was an intensely competitive pricing environment, leading to a warning on full-year profits.
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By GlobalData“We continue to expect full year total Partnership profits to be substantially lower this year, driven by slower sales growth over the year and margin pressure in John Lewis & Partners along with higher costs, mainly as a result of our continued investment in our IT capability,” he said.
Hannah Thomson, senior retail analyst at GlobalData, notes the modest sales growth John Lewis & Partners is encouraging, given the troubled state of its department store rivals.
“John Lewis should be recognised for successfully implementing its ‘differentiation and not scale’ strategy. With a network of 51 shops, it is not laden with underperforming stores, and it has been wise to facilitate growth of online by extending cut-off periods for click & collect orders, as well as making this service available in more Waitrose stores,” Thomson says. “This allowed John Lewis to fulfil 52% more click & collect orders on Christmas Eve, which is especially important for satisfying last-minute Christmas shoppers.”
