Solid John Lewis Christmas trading not enough to nudge profit expectations up

 
Catherine Neilan
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Christmas Shoppers Hit The High Streets Across the UK
Solid sales couldn't nudge the group's profits (Source: Getty)

The John Lewis Partnership has reported a solid Christmas period, with sales across the group up 4.1 per cent for the six weeks to 2 January to £1.81bn - but it's not enough to shift the group's full year decline in profits.

The figures

The department store business was the strongest driver of growth, with sales up 6.9 per cent, or 5.1 per cent on a like-for-like basis. Gross sales reached £951.3m.

Waitrose also had a good festive period, with sales up 1.2 per cent to £859.8m, although like-for-likes were down 1.4 per cent. Waitrose had record trading days on 23 and 24 December, with sales up six per cent and up 5.5 per cent respectively.

As a result of its festive figures, the group said it expected profit before tax, bonus and exceptionals for the year to 30 January to come in between £270m and £320m - a drop on last year's £342.7m.

John Lewis Partnership will report its full year results on 10 March 2016.

Why it's interesting

John Lewis - widely seen as a bellwether for the rest of the high street -said its patterns of trade "shifted significantly" in the run-up to Christmas, with "three distinct sales peaks" being identified - namely Black Friday, Christmas and clearance.

During the Black Friday weekend, the distribution team processed 18 per cent more parcels than last year - five units a second during its busiest hour. Whether or not the retailer will continue with the US import, after many other British firms shunned it this year, remains to be seen.

But the department store acknowledged it had struggled in the pre-Christmas period with lower footfall, meaning in-store sales were down 1.2 per cent. Bargain hunters were out in force during the first week of clearance, however, when sales climbed 16.2 per cent.

Online sales continue to be John Lewis' strongest division, up 21.4 per cent compared to last year, while mobile was the store's fastest-growing channel, with sales from smartphones and tablets up 31 per cent.

What John Lewis said

Chairman Sir Charlie Mayfield said: ""This has been a strong Christmas trading period for the Partnership despite the non-food market seeing significant shifts in trade patterns and the grocery market continuing to be challenging... Our performance reflects to a large extent the significant investment we have made in our distribution and IT capability. Despite the fact trade was even more concentrated across a number of very busy shopping days, our operations performed especially well."

He added: "Our strong Christmas trading performance gives us further confidence in the guidance provided at our interim results in September, where we indicated that we expected the full year profit before partnership bonus, tax and exceptionals to be between £270m and £320m.

"This guidance reflected both good operational progress but also an increase of approximately £60m in pension charges as a result of market driven volatility. Our guidance therefore remains unchanged."

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