John Lewis H1 sales up but operating profit falls 31.2 percent

In the first six months of the year, John Lewis continued to outperform, delivering solid gross sales of 2.02 billion pounds (2.67 billion dollars), up 4.5 percent, with strong like-for-like sales growth of 3.1 percent. Despite growing sales, operating profit fell by 31.2 percent to 32.4 million pounds (42.9 million dollars).

“We have grown gross sales and market share across both Waitrose and John Lewis, but our profits are down. This reflects market conditions and, in particular, steps we are taking to adapt the Partnership for the future. These are not as a consequence of the EU referendum result, which has had little quantifiable impact on sales so far. Instead there are far reaching changes taking place in society, in retail and in the workplace that have much greater implications,” said Sir Charlie Mayfield, Chairman of John Lewis Partnership.

John Lewis operating profit falls 31.2 percent

Across the product areas, John Lewis increased gross sales and market share and invested in in-house design capability to build combination of its own-brand collections and brands on the high street. EHT was up 8.4 percent, driven by computing and tablet category, up 8.7 percent, mobile phones and its first Smart Home concept in Oxford Street.

Fashion performed well in a declining market with sales up 2.8 percent, with womenswear up 4 percent and menswear up 4.9 percent, boosted by collaboration with vlogger Jim Chapman. Beauty was up 4 percent. Sales in Home were up 3.7 percent driven by furniture, up 6.8 percent. Outdoor living had a record half, up 14 percent.

Partnerships posts 3.1 percent rise in gross sales

Partnership gross sales were 5.27 billion pounds (6.97 billion dollars), an increase of 157.7 million pounds (208.8 million dollars), or 3.1 percent, on last year. Revenue was 4.67 billion pounds (6.18 billion dollars), up by 124.2 million pounds (164.4 million dollars) or 2.7 percent.

Partnership operating profit was 113.7 million pounds (150.7 million dollars), down 58.3 percent on last year. Excluding the exceptional items, operating profit was 138.7 million pounds (183.7 million dollars), down 4.3 percent on last year. Profit before tax was 56.9 million pounds (75.3 million dollars), down 74.6 percent on last year. Excluding the exceptional items it was down 14.7 percent.

This year, the company would open in two new locations; in Leeds and in Chelmsford. Both will feature new concepts as well as full in-store service offer across interior design, personal styling and technical advice. Online sales represented 34.5 percent of total merchandise sales, up from 30.6 percent. Overseas, the company continues to roll out its wholesale model with shop-in-shops in Australia and Ireland opening next year, taking the total international locations to 29, and the number of countries where johnlewis.com delivers to 40.

Foresees challenging trading conditions ahead

For the first six weeks of the second half, Partnership gross sales are up 3.8 percent. Waitrose gross sales have increased by 5 percent with 1.4 percent like-for-like, excluding petrol and John Lewis gross sales are 2 percent higher than last year with 0.7 percent rise on like-for-like.

PBT before exceptional items is down 14.7 percent and the company expects the trading pressures to continue through this year and next. However, it said that the EU referendum result has had little quantifiable impact on sales in the first half, but the uncertainty of leaving the EU will remain and the full impact of this change is yet to become clear.

Picture:John Lewis