Published on January 10th, 2019 | by The GC Team0
Upbeat Christmas for John Lewis but “substantially lower” profits expected
The John Lewis Partnership reported a positive Christmas trading period but said it continues to expect full-year total profits to be substantially lower this year, putting Partners’ annual bonus at risk.
Chairman Sir Charlie Mayfield said the Board will need to consider carefully in March whether payment of the bonus is prudent in the light of business and economic prospects at that time.
The fall in profits has been driven by slower sales growth over the year and margin pressure at omnichannel department store chain John Lewis & Partners, along with higher costs mainly associated with continued investment in IT capabilities.
Gross sales at the Partnership (John Lewis & Waitrose) were up 1.4% to £2,207m on last year.
Omnichannel department store chain John Lewis & Partners recorded sales up 2.5% to £1,160m and 1.0% up on a like-for-like basis. The retailer said it outperformed the market by 2.0% in the seven weeks to 5th January.
The trading period was defined by a longer Black Friday promotion, a 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.
Black Friday contributed to the biggest sales week in the omnichannel business’s history.
Commenting on the retail landscape, Mayfield spoke of an oversupply of physical space and relatively weak consumer demand being the two main factors are affecting the sector at this time. “Despite this,” he said, “we had a positive Christmas trading period thanks to the extraordinary efforts of Partners in our business, delivering differentiated products and service to customers.”