John Lewis hails ‘outstanding’ Christmas sales

Department store says sales rose 6.2% in the five weeks to 31 December – but did not say how profits had been affected

John Lewis has hailed “outstanding” Christmas sales but did not spell out whether profits had been dented by rivals’ promotions.

The employee-owned department store chain said like-for-like sales jumped 6.2% in the five weeks to 31 December. The retailer, which is holding its “biggest ever clearance”, conceded the sale had failed to pull in as many customers as last year when hordes of Britons hit the shops ahead of a looming VAT rise.

“Sales during the four weeks to Christmas Eve were outstanding,” said managing director Andy Street, with the company setting a new trading record of £133.1m in the week before Christmas. “The first week of clearance saw a very strong start, but against the pre-VAT increase week in 2010, it was always going to be a challenge to match sales, particularly with ‘big ticket’ items.”

Against a backdrop of weak consumer spending John Lewis said it had taken market share in clothing, home, beauty and electricals departments during the important five week period. There was also a strong performance from its home shopping arm where sales jumped nearly 28% and have now reached £600m in the year to date.

Analysts are keen to know if the heavy discounting witnessed on the high street before Christmas has affected the profitability of quoted rivals. John Lewis’s “never knowingly undersold” pledge forces it to match rivals’ promotions, a promise that cost it dear in the first six months of the year when profits declined 54.5% to £15.8m.

John Pal, a senior lecturer in retailing at Manchester Business School, said the price-matching guarantee might have caused it problems but added: “Whilst the whole retail sector is trading against the softish comparables of last year, when trade was blighted by the weather, it seems that the offer in terms of product and service, both in store and online, has really struck home with John Lewis’s core customer.”

Conlumino retail analyst Neil Saunders said John Lewis was probably the “standout winner” in terms of trading but cautioned: “The only slight cause for concern is on the margin front. While John Lewis will have had a profitable Christmas, margins are likely to have been eroded by price matching and this will result in lower profitability for the full year and a reduced bonus pool for partners.”

 

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