Profit warning issued by John Lewis with partnership bonus in doubt
By James Young | 9th January 2020
Sales at John Lewis stores were down over the Christmas period leading the partnership to say that profits will be "substantially down on last year."
John Lewis and Partners, who have a flagship store in Cheltenham's High Street, issued a trading update for the 17 weeks to January 4 which said sales had decreased by 2.3 per cent from 2018.
On a like-for-like basis that reflected a two per cent decline and led the chairman to issue a warning about full-year profits.
He also admitted that the partnership bonus paid to all staff will have to be discussed at the February meeting of the Partnership Board.
Sales were down across the board at the John Lewis Partnership, which also includes Waitrose and Partners, with a 1.8 per cent slump reflecting sales of £2.167billion.
Waitrose performed better than the High Street stores and although sales were down 1.3 per cent that was down to shop closures. Like for like sales were up 0.4 per cent to £1.033billion.
In the final seven days before Christmas, Waitrose and Partners reported a 16.7 per cent rise in sales and a 23.4 per cent increase in online grocery orders. John Lewis sales increased by 1.4 per cent.
Sir Charlie Mayfield, Chairman of the John Lewis Partnership, said: "We saw a good sales performance in Waitrose and Partners, despite a weak grocery market, with like-for-like sales up 0.4per cent.
"In John Lewis and Partners like-for-like sales were 2.0 per cent down on last year. Operationally - across availability, service, delivery and online - we saw a strong performance in both brands.
"Beauty sales were up 4.7per cent, comfortably ahead of the market, with overall Fashion sales up 0.1per cent.
"Home sales were down 3.4per cent and Electricals and Home Technology sales were down 4.0per cent.
"We saw significant variation in levels of demand with Black Friday sales up 10.0per cent on the equivalent period last year, followed by more subdued demand in the subsequent weeks.
"In Waitrose and Partners we saw encouraging progress against our milestones to accelerate growth online next year, with a 23.4per cent increase in orders and an increase in basket sizes in the seven days to Christmas.
"At the full year, we expect profits in Waitrose and Partners to be broadly in line with last year.
"In John Lewis and Partners we will reverse the losses incurred in the first half of the year, but profits will be substantially down on last year.
"We therefore expect that Partnership profit before exceptionals will be significantly lower than last year.
"The Partnership Board will meet in February to decide whether it is prudent to pay a Partnership Bonus.
"The decision will be influenced by our level of profitability, planned investment and maintaining the strength of our balance sheet."
While announcing the results, the partnership also announced that managing director of John Lewis and Partners will be leaving the group.
Paul Nickolds had been with the group for 25 years and was described as "an outstanding partner and leader."
A statement said: "After some reflection on the responsibilities of her proposed new role, we have decided together that the implementation of the Future Partnership structure in February is the right time for her to move on and she will leave the Partnership with our gratitude and best wishes for the future."
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