John Lewis saw solid sales growth in the first half of the year, with gross sales of £1.94b and like-for-like sales up 3.0%. Operating profit fell by 16.3% to £47.1m, impacted by restructuring costs, incremental costs for holiday pay and absorbing a greater share of centrally-incurred functional costs. It also reflects the costs associated with the ongoing shift in both channel and fulfilment mix, a consequence of operating in an omni-channel world.
John Lewis continued to outperform both the BRC and IMRG – a good performance in the context of lower consumer confidence at the beginning of the year. The results are also achieved against a strong Spring/Summer season last year, with 2014 boosted by 150-year anniversary promotions and high demand for Electricals and Home Technology (EHT) products in the run-up to the FIFA World Cup.
Gross sales in the fashion and home directorates accelerated during the period whilst EHT experienced a slower market.
Sales in Home were up 4.9% - a good performance against the impact of the General Election and a late start to summer sales. Outdoor living was up 33.5%. Own-brand continues to be the star performer with the company's newest range, Croft, achieving an increase of 87.5%.
Johnlewis.com gross sales grew by 17.1% to £647m. Online returns to shops are currently deducted from shops sales, but from 2016/17 onwards, John Lewis intends to change its reporting so that online returns to shops are deducted from online sales. After four years of consecutive growth, sales transacted in John Lewis shops were down by 1.8%, partly due to comparison to its 150 Year anniversary celebrations last year, but up 1.7% over a two year period. John Lewis' main focus continues to be on investing in both its shops and online to maintain and develop its omnichannel proposition.
John Lewis Birmingham, opening in September, will be its first full line department store to open in four years and represents a £35m investment in the heart of the UK’s second city. It will be the first to feature new concepts including an &Beauty spa. September also saw the reopening of John Lewis' home department at Oxford Street after a £14m investment, which will showcase London's largest single selection of home products and services, and underline our leadership in this key market. The first half saw the opening of a new at home shop in Horsham, which will be followed by a further at home shop in Basingstoke in October.
John Lewis' range of in-store services and experiences continued to expand during the half with the opening of three foreign exchange bureaus and the announcement of ten further Joe & the Juice or Rossopomodoro restaurants, and another in-store Opticians. It has expanded its international footprint, with shop-in- shops in Singapore and the Philippines joining its existing Korean sites.
Alongside John Lewis' shop investment, it continues to focus on the strength of its distribution model, with the announcement of a third national distribution centre in Milton Keynes. The retailer is determined to build a sustainable model so that it delivers on its customer promises at Christmas. In addition, the introduction of a £30 threshold for free Click & Collect has gone smoothly.
Looking forward, Black Friday and Christmas will again be defined by the importance of logistics and operational excellence, coupled with ensuring shops remain the “must visit” destination on the high street. John Lewis goes into the second half with confidence in both its ability to deliver outstanding customer service and in its strongest-ever product assortment.
