As beacons of UK retail, when John Lewis announced yesterday (September 17) that it made a £635 million loss in the first six months to July, and that none of its staff (partners) would be receiving their traditional annual bonus, for the first time since the Second World War, there were some sharp intakes of breath. However, £470million of the loss figure was an exceptional ‘one off’ write down in the value of its stores, meaning that in the first six months of this year, John Lewis and Waitrose made a loss of £55m. This is about the same as this time last year, which chairman Sharon White described in a letter to all partners as “a creditable performance in the circumstances and ahead of expectations” that were included in the retail group’s April trading update.
Revealing the overall performance, Sharon said that “Sales momentum is starting to build in reopened stores, with sales down around 30% on last year, ahead of expectations. Stores in retail parks are down by around 15% and are doing better than city centres, especially London which is down around 40%.”
Encouragingly, greeting card sales have been and are outperforming other product sectors for John Lewis & Partners.
“We feel very optimistic about greetings cards,” said Sarah Moughtin, junior buyer responsible for greeting cards. “John Lewis branch performance is increasing week on week and we are not too far adrift from last year’s sales which is incredible!”
Highlighting particular areas of top performance, Sarah “Kids, age and contemporary are strong categories for us and it is also good to see New Home cards coming through strong now.”
With Christmas officially launching in the next couple of weeks she is anticipating “an exciting season, with lockdown and ‘rule of six’ dampening Christmas gatherings you can be sure that greeting cards will play a vital role for keeping in touch with loved ones and sending festive cheer.”
And the greeting card picture is even better at Waitrose. Sarah confirmed that greeting card performance “continues to stand out with double digit growth each week, surpassing our expectations. Woodmansterne has done a brilliant job of installing and we are now full steam into trading together for what looks to be an exciting Autumn/Winter season.”
Looking ahead, John Lewis’ chairman said that the outlook for the second half of the year “is clearly uncertain given the broader macroeconomy. Christmas trade is also particularly important to profits. In April, we set out a worst case scenario for the full year of a sales fall of 5% in Waitrose and 35% in John Lewis. That remains our worst case view. We now believe the most likely outcome will be a small loss or a small profit for the year.”
She believes that “The pandemic has brought forward changes in consumer shopping habits which might have taken five years into five months,” said Sharon, citing the surge in online sales as part of this. Online now accounts for more than 60% of John Lewis’ sales, from 40% before the pandemic. Before the crisis the company calculated that its shops contributed around £6 of every £10 spent online. Now this figure has been reduced, on average, to around £3.
Top: John Lewis and Waitrose partners will be forgoing their annual bonus this year.