Chairman Charlie Mayfield says economic environment turned out better than expected and the Partnership will “maintain momentum” in its growth plans.
The John Lewis Partnership published its H1 results yesterday for the 26 weeks to August 1, 2009, revealing a total sales increase of 3.5% to £3.39bn. However, sales for its department store chain John Lewis dipped 2.9% to £1.21bn.
Like-for-like (lfl) sales were also down 4.7%, while operating profit dropped 49% to £20.9m. The company said that this figure was “better than expected” but that it had been impacted by lower sales of 6.7% in established stores and higher costs in its new Liverpool and Leicester department stores, coupled with higher energy costs and a £3.4m investment in “change and growth initiatives”.
John Lewis Partnership chairman Charlie Mayfield said of the results, which included a strong performance by supermarket chain Waitrose: “By the beginning of this year we had adjusted to the severe recessionary conditions and anticipated tat 2009 would be another very difficult trading year. The economic environment has turned out to be better than we originally expected and although conditions remain challenging, we have seen an encouraging response to the steps we have taken to reposition the Partnership to the new retail environment.
The department store’s online offer, John Lewis Direct gave a strong performance for the first half, with sales up 11.6% to £151.5m. However, in store, sales of electrical and home technology was down 2.5%, with home also suffering a decline of 8.1% – the area of John Lewis’ trade most effected by the decline in the housing market.
Despite this, the company said that gross margin help up well for the first half, while the chain aims to strengthen its price position with its Value range this week launched this week.
Looking to the future, Mr Mayfield added: “The second half has started well for the Partnership. After six weeks, Partnership sales are up 6.2% on last year. Waitrose sales increased 11.3% and John Lewis sales are 1.3% lower. However, we expect trading conditions for the remainder of 2009, and into 2010, to continue to be difficult.
“We will maintain the momentum in our plans and the ambitious pace of change. In the second half of the year we will invest a further £189m (H1 £278.2m) in strengthening the business and creating a platform for growth. We…will continue to invest in existing and new shops and formats, develop our multi-channel offer and improve the efficiency of our business.”
Following a £22m refurbishment programme at its store in Bluewater, John Lewis will open a new department store in Cardiff this month, while construction is also underway on its new branch at the Olympic site in Stratford – scheduled to open in 2011.