John Lewis has reported sales up 2.5% to £1,962m in the six weeks to 30 December but has said that increased promotional activity in the market, which John Lewis matches through its Never Knowingly Undersold approach, has put pressure on margins.
During the period its upscale supermarket Waitrose achieved a 1.4% increase in sales to £928m (these figures do not include New Year’s Eve trading) and department store John Lewis was up 3.6% on last year (3.1% like-for-like) at £1,034m.
The business reported that Black Friday was John Lewis’s most successful sales day in its history and contributed to the biggest ever week of sales, up 7.2% year-on-year and it added that 65.5% of its Click & Collect sales were from Waitrose (0.9%pts) driving footfall to the supermarket.
Chairman of the John Lewis Partnership Sir Charlie Mayfield commented in the trading update: “We traded well during the Christmas period, with gross sales in the six weeks to 30 December £1,962m, up 2.5% on last year, with 1.4% sales growth in Waitrose and 3.6% in John Lewis. This was due to the exceptional hard work and commitment of our Partners. We focused on our differentiated product offering, attention to service and strong value proposition, underpinned by our Never Knowingly Undersold promise.
“The pressure on margin seen in the first half of the year has intensified because of our choice to maintain competitive prices, despite higher costs mainly due to the weaker exchange rate. This will negatively affect full-year financial results as indicated previously,” he said.
Mayfield added that he expected the trading climate to remain “volatile” during 2018. “[We] anticipate that competitive intensity will continue, driven by the structural changes taking place in the retail industry. We are well placed to continue building the strength of our two leading brands through these changes and will maintain our current investment plans. Our focus continues to be offering our customers the best range of products and the best value, supported by a market leading service,” he added.