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John Lewis and Waitrose report ‘strong’ first half

John Lewis, the employee-owned department store chain, has reported a strong first half trading performance with like-for-like sales growth of 5.1%. In the half year ending… View Article

GENERAL MERCHANDISE NEWS

John Lewis and Waitrose report ‘strong’ first half

John Lewis, the employee-owned department store chain, has reported a strong first half trading performance with like-for-like sales growth of 5.1%.

In the half year ending 27 July, gross sales increased by 6.6% to £1.71 billion while revenues climbed 6.5% to £1.37 billion.

Operating profit before restructuring costs rose 9.9% to £50.1 million, reflecting both a strong sales performance and a focus on cost control.

The retailer’s restructuring costs in the first half were £15.4 million as it streamlined its department store management structures and a new distribution infrastructure to improve long-term efficiency. As a result, operating profit including these costs was down 23.9% to £34.7 million.

Sales in the retailer’s stores grew by 3.4% in the period while online sales increased by 17.1%. John Lewis said the growth was largely fuelled by market share gains across each of its categories.

In the buying directorates, electricals and home technology sales increased by 15.7% to help the retailer achieve a record market share of 7.6%. In fashion, sales rose by 4.2% boosted by the popularity of the retailer’s own-brand collections.

Online sales at johnlewis.com passed the significant milestone of £1 billion annual online sales on a rolling 52 week basis, which was a full year ahead of target.

The retailer said it had made a significant investment in a new web platform which went live during the first half. Having launched a transactional mobile app in July, John Lewis said that over 40% of traffic now comes from mobile phones or tablets.

Meanwhile at sister retailer Waitrose, gross sales grew by 7.8% to £3.02 billion with like-for-like sales growth of 6.9%. The grocer’s revenue increased by 8% to £285 billion while operating profit rose 12.8% to £160.2 million to slightly exceed expectations.

Waitrose opened four new branches (two core, two convenience) in the first half and relocated one branch. It plans to open a further six core branches and three convenience stores in the second half.

The grocer now has 56 convenience shops, including 19 outlets at Welcome Break motorway service stations. During the half year, it renewed its franchise partnership with Welcome Break for a further 10 years and also began providing food and snacks on Eurostar services to and from Europe.

Online sales at Waitrose.com grew by 40.6% as investment in the capacity for branches to fulfil Waitrose.com orders resulted in a 40% increase in online delivery slots nationwide.  

Across the John Lewis Partnership, gross sales rose by 7.3% to £4.73 billion while revenue increased by 7.5% to £4.22 billion.

Profits rose by 3.9% £115.8 million before tax and exceptional items. However, a payment of £40 million to staff following the miscalculation of holiday pay over the last seven years meant that bottom-line profits declined by 38.5% to £68.5 million.

Commenting on the results, chairman Sir Charlie Mayfield, said: “The Partnership has had a strong first half with sales up 7.3% and profit before exceptionals up by 3.9%, slightly ahead of our expectations due to a good trading performance in both businesses.

“I am particularly pleased that both Waitrose and John Lewis again increased their market shares significantly during the first half. Year-on-year, we grew our customer numbers by 6%, helped especially by initiatives such as myWaitrose and our market leading omni-channel offer in John Lewis.

“Looking ahead, I’m encouraged by progress this year and am confident of the plans we have in place for Christmas. Despite a strong second half last year, both during the Olympics and at Christmas, I expect us to trade positively in the second half.”

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