Daily Newsletter

14 September 2023

Daily Newsletter

14 September 2023

John Lewis H2 clothing sales uplift pales in comparison to M&S success

Inflation has continued to weigh heavy on UK department store John Lewis & Partners’ bottom line, despite a modest uplift in its fashion sales.

Hannah Abdulla

John Lewis & Partners which owns the John Lewis and Waitrose brands recorded narrower losses before tax by 41% to £59m (US$73.6m) in H2. Before-tax and exceptional item losses came in at £57.3m compared with a loss of £66.8m a year earlier.

Total sales for the group were 2% higher at £5.8bn while revenue was up 3%.
But John Lewis unit sales were down 2% to £2.1bn. The retailer pointed out the fashion segment benefited by customers continuing to “spend on themselves” which resulted in a 3% sales rise for the half-year compared to a year earlier.

Meanwhile, Zoe Mills, lead retail analysts at GlobalData, says the partnership “has succumbed to the pressures of the cost-of-living crisis, as the mid-market player struggled to retain appeal in a retail market plagued by consumers seeking low prices.”

“Indeed, as was noted this time last year, a marked improvement in H2 will be needed to improve its fortunes – something that could be feasible, though challenging, as it comes up against weaker comparatives.”

Mills asserts that while, similar to Next, clothing and beauty experienced a modest uplift, this was offset by lacklustre sales on big-ticket items. Conversely, Marks & Spencer, whose offering is similar, performed better with its Clothing & Home sales up 6% for the 19 weeks to 12 August.

She explains: “The smaller-ticket nature of fashion and beauty ensured shoppers could treat themselves to smaller luxuries despite the need to limit non-essential spending amid the cost-of-living crisis. Yet, the introduction of interest-bearing credit, which is live online and will come to stores from mid-October, is a good way to combat consumers’ hesitancy to make big-ticket purchases, ensuring John Lewis & Partners remain competitive with the likes of Very and Currys – both of which have competitive finance options.”

Mills also points out physical stores are continuing to outperform online, a thorn in the retailer’s side since it only operates out of 34 stores. “The department store retailer’s success continues to ride on a seamless online proposition.

“Indeed, John Lewis & Partners noted that consumers were drawn to its stores for services, with styling appointments up 27% and nursery consultations up 17%. Replicating this service element online is something it should develop given its limited physical reach in the UK as this will improve the weaker conversion seen online during this period.”

Traditional AI is here to stay in the retail and apparel space

Initially, retailers used AI for basic tasks, including inventory management and demand forecasting. However, its usage has now become more prevalent in other aspects such as personalized marketing, customer service, pricing optimization, and supply chain management. With the rise of ecommerce and the increasing importance of data-driven decision-making, AI adoption in retail and apparel has accelerated. The industry now relies on AI to enhance the shopping experience, optimize business operations, and gain an overall competitive edge.

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