In its unaudited results for the year ended 27th January 2018, the John Lewis Partnership (JLP) reports gross sales up +2.0% – yet profit before partnership bonus, tax and exceptional items was down -21.9%, principally driven by an exceptional charge of £111.3m for restructuring and redundancy costs, plus Waitrose branch impairments, meaning staff will receive a smaller bonus.
John Lewis itself saw gross sales up +2.2% to £4.84b, with LFL sales growth of +0.4%, and operating profit before exceptional items up +4.5% at £254.2m.
Home sales were down -0.8%, predominantly driven by soft demand in more considered categories such as Fitted Furniture, Fitted Flooring and Upholstery. Conversely, Outdoor Furniture performed well.
The retailer continued to improve productivity across the business, and leveraged investments made in recent years in its distribution network.
Customer numbers increased by +2.5% to 12.6m, while John Lewis' Net Promoter Score – which indicates customers’ willingness to recommend it to others - increased. As part of the retailer's drive to improve customer experience, it introduced a number of initiatives including two-hour delivery slots, online order tracking and the ability to see more detailed product information and branch stock availability online. In addition and continuing its plans to reinvent the department store format, the retailer launched Experience Desks in four shops, providing customers with concierge-style services.
Looking ahead, as part of John lewis' ambition for 50% of its products to be own-brand or exclusive, the retailer plans to strengthen its design credentials to offer customers truly unique products, by investing in staff across its Design, Technology and Buying teams. This year, John Lewis will also launch a number of test-and-learn innovations to help it further differentiate its offer, and will conclude its programme to move online content to a single platform, providing customers with a more seamless shopping journey optimised for whichever device they use.
Shop openings are lined up for White City and Cheltenham.
Partnership chairman Sir Charlie Mayfield comments: "As we anticipated, 2017 was a challenging year. Consumer demand was subdued and we made significant changes to operations across the partnership which affected many partners.
"We said in January 2017 that we were preparing for tougher trading conditions with weakness in Sterling feeding through into cost prices, putting pressure on margin, and much higher exceptional costs as a result of an acceleration of planned changes. This was why we chose to reduce the proportion of profits paid as partnership bonus last year so as to absorb these impacts while continuing to invest in the future and in strengthening our balance sheet. We did both and I am pleased to say that despite lower profits, strong cash flow has enabled us to reduce our total net debts."