New brand and own-brand development helped fashion sales withstand an otherwise disappointing set of results for the partnership, managing director of John Lewis & Partners Paula Nickolds has told Drapers.
The department store chain this morning reported a loss of £25.9m for the half-year to 27 July 2019, down from an £800,000 profit during the same period last year.
However, sales of its own-brand womenswear were up 5.7% year on year, and overall womenswear sales increased 4%.
”Our fashion and beauty results are very strong, and bear a good comparison in what is quite an anaemic market in those areas,” said Nickolds. ”The combined impact of new brands and significant own-brand development, as well as investment in space and services, has really paid dividends.”
The retailer launched its largest own-brand womenswear label – also called John Lewis & Partners – last autumn. It will unveil its new in-house menswear brand this month, under the same name, with a 280-piece collection. It follows the introduction of six new independent menswear brands in February.
Nevertheless, John Lewis is still under immense pressure from competitor discounts and a decline in consumer confidence. It made an operating loss, before exceptional items and the cost of implementing IFRS 16 [a new property leasing standard], totalling £61.8m, compared with a £19.3m loss last year.
Nickolds told Drapers that the department store saw a 73% increase in price changes year on year as a result of its commitment to its “Never Knowingly Undersold” price promise: “This dropped straight to the bottom line. It’s a direct consequence of lower consumer confidence, which I sadly expect to continue.”
Yet, as the calendar ticks round to the retail industry’s heaviest promotional period, and competitors such as Debenhams and House of Fraser slash prices to chase short-term earnings, John Lewis shows no signs of abandoning its price match promise.
”We remain committed to our principles and the long-term commitment we’ve made to Never Knowingly Undersold,” said Nickolds. “We’ve outperformed the market and that’s about the continued investment in doing things differently and we continue to press forward. That will stand us in good stead against the distress.”
In this morning’s results announcement, outgoing chairman Sir Charlie Mayfield warned of the impact on the business of a no-deal Brexit. He said the effect would be ”significant” and “it will not be possible to mitigate that impact”.
”In readiness, we have ensured our financial resilience and taken steps to increase our foreign currency hedging, to build stock where that is sensible, and to improve customs readiness,” he added.
The biggest impact will undoubtedly be to the Partnership’s food business in the short term. However, Nickolds added: “We’ve taken sensible steps particularly around our readiness for customer changes, labour preparations and building some stock where we can. The biggest consideration in non-food is this continued uncertainty for consumers and what that’s doing to the propensity to spend, and that’s far from ideal.”
Despite this, Mayfield remained positive about the coming financial half-year: “We want to make more money than we did last year, that could be a real stretch but we’re really going for it. We have bold and ambitious plans to allow the partnerships to break out from the pressures facing retailers.”