John Lewis overall sales down 17% but online sales spike 84% since mid-March
With stores closed due to the COVID-19 pandemic, John Lewis has seen mixed trading results, but a spike in online sales of 84% year-on-year since the middle of March point to a new demand for products linked to working and living at home.
Overall, John Lewis sales are down 17% year-on-year since the middle of March, and down 7% year-on-year since 26 January.
In a trading update statement released today, partner and chairman, Sharon White, said: “Our worst-case scenario for the full year assumes significant sales decline between April and June, and weak sales thereafter.
“Over the course of the full year, this worst case would result in a sales decline of around 35% in John Lewis, around double the current level, while at Waitrose it would result in a more modest decline of less than 5%.”
Products associated with keeping fit, technology, entertaining children and food preparation have all seen significant sales increase online at John Lewis. The statement noted that the retailer is “buying more Scrabble, but fewer sofas.”
In terms of cash and liquidity, John Lewis & Partners started the financial year with just over £900m cash and investments in the bank, with access to a further £500m of undrawn committed bank facilities.
Six weeks into the crisis, and the company is holding broadly the same level of cash and investments but, as the statement says, with such unprecedented trading volatility, it has a range of actions ready to take to secure financial sustainability.
The government has introduced a 12-month business rates holiday for England and Scotland which will save the Partnership £135m this financial year, and it has also deferred payment of VAT until March 2021, which will help short term cash flow.
The John Lewis board has already taken a number of steps to preserve liquidity, including lowering planned stock intake in line with slower trading in John Lewis, cutting marketing spend by £100m and furloughing more than 14,000 partners. It has also negotiated with landlords regarding rent relief, including an immediate switch to monthly from quarterly payments.
White added: “In addition, the executive team, non executive directors of the Partnership board, the independent directors and I will be taking a 20% cut in pay from April, initially for three months.”
John Lewis & Partners announced in March that it will be undertaking a strategic review of the Partnership to strengthen its core retail business and develop new services outside retail.
The review will now be accelerated and will be substantially complete by the summer. It will seek to take account of changes in consumer behaviour to come out of the COVID-19 pandemic, such as a more pronounced shift to online and a desire to shop in more sustainable ways.