John Lewis & Partners has reported a drop in sales over the Christmas period, and announced its managing director, Paula Nickolds is to leave as part of the merger of the management with supermarket division Waitrose & Partners.
John Lewis & Partners’ gross sales dropped 2.3% to £1.1bn between 17 November 2019 and 4 January 2020, year on year, and were down 2% on a like-for-like basis.
However, online sales increased by 1.4%. Overall fashion sales were up 0.1% and beauty sales increased by 4.7%.
Home sales were down 3.4%, and electricals and home technology sales were down 4%.
The retailer reported a 10% rise in Black Friday [beginning 29 November] turnover on the equivalent period last year, following “more subdued demand” in the subsequent weeks.
John Lewis Partnership also announced that managing director Paula Nickolds will leave next month as part of the “Future Partnership” programme to merge the management of John Lewis and Waitrose, announced in October. Nickolds joined the retailer in 1994 as a graduate trainee.
She was meant to become the new brand executive director, overseeing both John Lewis and Waitrose in a newly-created role she was due to take up in February.
It said: “Paula has been with the partnership for 25 years and has been an outstanding Partner and leader throughout her time. She has played a central role in the development of John Lewis & Partners over the last 10 years in a variety of senior positions.
”After some reflection on the responsibilities of her proposed new role, we have decided together that the implementation of the Future Partnership structure in February is the right time for her to move on and she will leave the partnership with our gratitude and best wishes for the future.
”Future Partnership will be in place from the start of February, when Sharon White will become the partnership’s sixth chairman.”
Meanwhile, chairman of the John Lewis Partnership Sir Charlie Mayfield, who is stepping down this year, also warned that staff may miss out on a bonus. The last time this happened was in 1953.
At Waitrose & Partners gross sales (excluding fuel) for the Christmas period were down 1.3% year on year to £1bn as a result of shop closures, but up 0.4% on a like-for-like basis. Online sales increased by 16.7% and in the seven days to Christmas online grocery orders were up 23.4%.
“We saw a good sales performance in Waitrose & Partners, despite a weak grocery market, with like-for-like sales up 0.4%,” said Mayfield.
“In John Lewis & Partners like-for-like sales were 2% down on last year. Operationally – across availability, service, delivery and online – we saw a strong performance in both brands.
”In John Lewis & Partners, beauty sales were up 4.7%, comfortably ahead of the market, with overall fashion sales up 0.1%. Home sales were down 3.4% and electricals and home technology sales were down 4%. We saw significant variation in levels of demand with Black Friday sales up 10% on the equivalent period last year, followed by more subdued demand in the subsequent weeks.
”In Waitrose & Partners we saw encouraging progress against our milestones to accelerate growth online next year, with a 23.4% increase in orders and an increase in basket sizes in the seven days to Christmas.”
He added: “At the full year, we expect profits in Waitrose & Partners to be broadly in line with last year. In John Lewis & Partners we will reverse the losses incurred in the first half of the year, but profits will be substantially down on last year. We therefore expect that Partnership profit before exceptionals will be significantly lower than last year. Our balance sheet and liquidity position are strong and we expect to improve our debt ratio (subject to interest rate movements that may affect our year-end pension deficit).
”The partnership board will meet in February to decide whether it is prudent to pay a partnership bonus. The decision will be influenced by our level of profitability, planned investment and maintaining the strength of our balance sheet.”
Commenting on the Christmas trading update, Richard Lim, CEO of Retail Economics, said: “These figures confirm that trading is tough and news that the MD is stepping down could signal just how uncomfortable life is getting.
“Excitable Edgar did little to fire up Christmas sales with declines across non-food and a woeful performance in the online business which barely showed any signs of growth. The later timing of Black Friday may ultimately have been the destructive force at play. Consumers appear to have pulled forward gift purchases to take advantage of deep discounts at the expense of Christmas trading.
“What’s more, in this hyper-competitive industry, their price matching promise is likely to have eroded margins further against the backdrop of rising operating costs. Waitrose performed better but continues to undergo a transformation in the business. The shining light was an impressive performance in their online proposition.”
John Lewis & Partners operates 50 shops across the UK, including 37 department stores, 12 John Lewis at home and shops at St Pancras International and Heathrow airport, as well as its website.