John Lewis Partnership Christmas trading statement for seven weeks to 5 January 2019
John Lewis Partnership Christmas trading statement for seven weeks to 5 January 2019
Trading highlights:
Sir Charlie Mayfield, Chairman of the John Lewis Partnership, said: 'Two main factors are affecting the retail sector - oversupply of physical space and relatively weak consumer demand. Despite this, we had a positive Christmas trading period thanks to the extraordinary efforts of Partners in our business, delivering differentiated products and service to customers.
John Lewis & Partners like-for-like sales grew by 1.0% 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%. However, gross margins remained under pressure in what was an intensely competitive pricing environment. Waitrose & Partners achieved the best operational performance we have seen for some years, with good availability, low wastage and Partners focused on providing better customer service. Like-for-like sales increased by 0.3%, despite a sharp reduction in the level of promotions as we focused on our most loyal customers. We are well on track to grow Waitrose & Partners’ profits for the full year.
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. The actions taken in recent years to prepare for the current pressures in retail mean that the Partnership has the financial strength and flexibility to pay a modest bonus this year, without impacting our ambitious investment programme. However, the Board will need to consider carefully in March, following the usual process, whether payment of a bonus is prudent in the light of business and economic prospects at that time.'
Delivering our strategy
In summer 2018 we outlined an update to our business strategy and we have continued to make good progress. This sees Waitrose & Partners and John Lewis & Partners focusing on differentiation not scale and offering increasingly unique and exclusive products and services to customers; enhancing the role that Partners play in driving our difference and competitiveness; maintaining investment levels at £400m-£500m a year; and strengthening our balance sheet by £500m over three years.
We expect to deliver significant positive free cash flow this year, continuing to prioritise a very strong liquidity position and a reduction in our Debt ratio over the medium to-long-term. We will repay the maturing £275m April 2019 bond out of existing cash reserves, which we have further increased with the recent addition of £125m of medium-term bank debt, therefore reducing outstanding debt by £150m.
Waitrose & Partners
This Christmas saw Waitrose & Partners offer a strong and innovative product range and we are on track to deliver full year profit growth. A well-planned, smooth-running operation and good availability allowed our Partners to focus on providing great customer service, with particularly strong growth online at 12.8%.
Differentiation: Product innovation
Differentiation: Great service
Differentiation: Doing the right thing
John Lewis & Partners
John Lewis & Partners grew like-for-like sales and, despite significant outperformance of the market last year, outperformed once again; with notably strong trading in Fashion, particularly in Womenswear and Beauty.
The trading period was defined by a longer Black Friday promotion, 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.
Differentiation: Desirable products
Differentiation: Exceptional service
Differentiation: Services
[1] Seven week period this year runs from 18 November 2018 to 5 January 2019 (last year - seven weeks to 6 January 2018).
[2] British Retail Consortium (BRC).
Notes to editors
The John Lewis Partnership johnlewispartnership.co.uk owns and operates two of Britain's best-loved retail brands - John Lewis & Partners and Waitrose & Partners. Started as a radical idea nearly a century ago, the Partnership is now the largest employee-owned business in the UK, with 83,000 employees who are all Partners in the business and share in its profits. The Partnership operates on strong democratic principles, which means that every Partner has a say in how the organisation is run. The business has annual gross sales of over £11.5bn, 400 shops and a leading online business. Its commercial strategy is focused on differentiation rather than scale, through investment in innovation and Partner led service.
Waitrose & Partners has 349 shops in England, Scotland, Wales and the Channel Islands, including 65 convenience branches, and another 27 shops at Welcome Break locations. It combines the convenience of a supermarket with the expertise and service of a specialist shop - dedicated to offering quality food that has been responsibly sourced, combined with high standards of customer service. Waitrose & Partners exports products to more than 50 countries worldwide and has nine shops which operate under licence in the Middle East. The retailer's omnichannel business includes the online grocery service, Waitrose.com, as well as specialist online shops including waitrosecellar.com for wine and waitroseflorist.com for plants and flowers.
John Lewis & Partners operates 51 John Lewis & Partners shops across the UK (37 department stores, 12 John Lewis at home and shops at St Pancras International and Heathrow Terminal 2) as well as johnlewis.com. The retailer stocks around 350,000 separate lines in its department stores and on johnlewis.com across fashion, home and technology. This year John Lewis & Partners won, 'Best Multichannel Retailer 2018', 'Best Clothing Retailer 2018', and 'Best Furniture Retailer 2018' at the GlobalData Retail Customer Satisfaction Awards 2018. John Lewis Finance offers a range of comprehensive financial services products - including Insurance, Foreign Currency, International Payments and the Partnership Card - delivering the values of expertise, trust and customer service expected from the John Lewis brand johnlewisfinance.com
Enquiries
For further information, please contact:
John Lewis Partnership
Clayton Hirst,
Partner & Group Head of Corporate Affairs,
Tel:07947 708167
Sarah Henderson,
Partner & Group Senior External Communications Manager,
Tel:07764 676036
Citigate Dewe Rogerson
Simon Rigby,
Joint Managing Director,
Tel:07771 784446
Jos Bieneman,
Director,
Tel:07834 336650
Ellen Wilton,
Associate Director,
Tel:07921 352851
John Lewis & Partners
Gillian Taylor,
Partner & Head of Communications,
Tel:07919 057931
Emily Dimmock,
Partner & Senior Corporate Communications Manager,
Tel:07712 545677
Waitrose & Partners
Graeme Buck,
Partner & Head of Communications,
Tel:07703 379561
Gill Smith,
Partner & Senior Corporate PR Manager,
Tel:07887 898133
Debt investors
Alan Drew,
Partner & Head of Treasury and Corporate Finance,
Tel:07525 582955