With online sales up 44% and shop sales up 13%, department store group’s bumper takings bode well for staff bonus
John Lewis has kicked off the retail reporting season with a record festive trading performance underpinned by runaway online growth at its website, which is now raking in a quarter of total sales.
Like-for-like sales at the department store, which exclude gains made from new shopfloor space, jumped 13% in the five weeks to 29 December, a period that included three record-breaking weeks. The managing director, Andy Street, said he did not expect any other retailer to beat John Lewis’s performance across all sectors.
Online sales were 44% higher than last year with Johnlewis.com now a conduit for £1 out of every £4 spent with the store. With just a month to go until the end of the retailer’s financial year, website sales broke through £800m in December.
The bumper Christmas takings, which were mirrored at supermarket chain Waitrose – also part of the John Lewis group – bode well for the annual staff bonus, due to be unveiled in March. Last year the 75,000 partners, who own the business, received payouts worth 14% of their annual salary, with all staff from the chairman to Saturday shelf-fillers getting the same percentage. Last September, at the time of its half-year results, the group posted a near-60% bounceback in profits after a difficult 2011.
With more and more Britons turning to the internet to do their Christmas shopping, Street said the retailer’s online success had not come at the expense of its department stores: “It’s a bricks and clicks story, it’s obvious that the same customers are using both channels.”
With Next due to update the City on Christmas trading on Thursday, ahead of a raft of updates next week, Conlumino analyst Neil Saunders said John Lewis had set the bar “extremely high”. He added: “More than ever before this Christmas was one dominated by online, and John Lewis was in an ideal position to capitalise on this trend.”
Saunders pointed to the chain’s investment in a click-and-collect service, which includes allowing John Lewis shoppers to pick up from Waitrose outlets. “By any standards, this is an impressive performance, but when the general trading environment over Christmas is taken into account it underlines the fact that John Lewis is outperforming the market by a very significant degree,” said Saunders.
The retailer’s home technology departments were the strongest performing areas with sales up more than 30% on 2011 thanks to demand for the latest tablets and e-readers as well as extra trade following the collapse of Comet, Street said. Sales in its fashion and beauty aisles were also up over 10% as traditional gifts such as handbags and beauty gift sets did well.
Street said the retailer had won custom from rivals during the important trading period : “We don’t know how well our rivals have done yet but my suspicion is that no one else will have gained market share across all categories.”
He added that Britons had been a little more willing to spend than last year when the country was still in recession, adding: “December was a little stronger for everybody but I would predict that nobody will be near our numbers.”
In the week leading up to Saturday 22 December sales broke through £150m for the first time with takings at its 39 stores and website hitting nearly £158m – a 26.5% rise on the equivalent week of 2011. Although the retailer’s sale started online on Christmas Eve, its stores saw record takings of £31.7m when they reopened for business on 27 December. John Lewis chalked up sales of £112.9m in the week to 29 December, which although not a record, was a 11.5% increase on last year.
With major chains such as John Lewis, Marks & Spencer and Curry’s starting their sales online on Christmas Eve, some analysts have suggested the appeal of trekking to shopping centres to scour the sale racks could be waning. But Street said that had not been John Lewis’s experience: “It spreads it [spending] out but even with that we had a record first day of clearance,” he said. “It’s not about internet at the expense of shops – the two are complementing each other.”
With its “never knowingly undersold” policy, John Lewis is forced to cut prices to match deals in competitors’ stores, but Street suggested there had been less discounting before Christmas than in previous years: “Never knowingly undersold always costs us but I can say categorically it has not cost us more this year. Our discounting is in response to others so I think there was less.”