John Lewis & Partners’ Annual Report & Accounts (published on April 21) reveals that while online trading is up, it has not been enough to offset the loss of shop trade. However, chairman Sharon White says: “we are confident that the future of the business is strong.”
In a statement to Partners, she explained: “This is a time of great uncertainty and volatility and the full year picture is impossible to predict. We are therefore looking at a range of different possible outcomes and how these may affect profits, sales and cash flow.”
She said that short term trading had been significantly affected, due to the closure of all 50 John Lewis branches, although online remained strong, with sales substantially up on last year. “However, it has not been enough to offset the loss of shop trade.”
The statement revealed that at John Lewis, trading has been mixed. With stores closed, there has been a significant spike in online sales which have gone up 84% year-on-year since the middle of March, with the highest demand linked into working and living at home. However, overall, John Lewis sales are down 17% year-on-year since the middle of March, and down 7% since January 26.
“Our worst case scenario for the full year assumes significant sales decline between April and June, and weak sales thereafter,” states Sharon. “Over the course of the full year, this worst case scenario would result in a sales decline of around 35% in John Lewis, around double the current level.”
She added that, “with unprecedented trading volatility, we have a range of actions that we are ready to take to secure the financial stability of the Partnership.” This includes reducing operating costs, such as cutting back on the company’s marketing spend by close to £100m.
It was also confirmed that the company will be accelerating a strategic review of the Partnership that will strengthen the core retail business and develop new services outside retail. It will seek to take account of changes in consumer behaviour to come out of the pandemic, such as a pronounced shift to online and a desire to shop in more sustainable ways.
Top: John Lewis & Partners has had to take some tough decisions.
