The John Lewis Partnership team were all smiles last week after announcing record results and a bonus windfall for staff. But the event, where annual profits of £319 million were unveiled, also marked another major landmark for the group - the first public appearance of new John Lewis managing director Andy Street, who has been in the job just two weeks.
He replaces Charlie Mayfield, who will become group chairman later this month when incumbent Sir Stuart Hampson retires.
Street was previously director of personnel at the partnership, which owns department store chain John Lewis and Waitrose supermarkets. It was a surprise appointment for some observers, who had tipped then-retail operations director Gareth Thomas for the post. Thomas's role was subsequently expanded to retail design and development director.
Street takes the reins of a business at the top of its game. Record profits of £264m were also achieved at the department store chain for the year to January 27.
Mayfield's leadership will be a tough act to follow, and whether Street will be able to deliver equally impressive figures a year from now is a key question for the company.
While Mayfield and Hampson announced staff bonuses of 18% of salary, Street used his debut to temper the press's expectations of a repeat of 2006's stellar performance. Record results may make Street's first days in the job a little easier, but his success will be measured against much tougher comparables.
"Last year's 10.6% (total sales rise at John Lewis) was outstanding. It will be surprising if we emulate that next year," he warned. "It will be more than 7% and we are still winning market share. It will still be ahead of most other leaders in the sector. Between 7% and 10% would be a good performance."
Street's down to earth matter-of-factness contrasts with ex-army Mayfield's calm charm. But there is no suggestion that a new boss will signal any radical change in attitude, as the John Lewis corporate tone remains firmly intact.
Pali International analyst Nick Bubb says it is likely that Mayfield, as chairman, will remain highly involved in John Lewis's strategy. He adds: "Street may not be as smooth an operator as Mayfield, but he is quite dynamic. I'm sure he'll push through the new stores and the revamps."
At the results, Street spoke with confidence about the retailer's plans, from its aggressive store opening strategy to product development. "The success of this year has been hard won over a number of years and there are several areas of success to consolidate," said Street. "My priority is to deliver what we said we would - expansion, quality product and excellent value across our whole offer for our customers."
His commitment to developing the business's fashion offer is also as strong as his predecessor. Street said he was proud of the developments John Lewis had made in menswear, and that its destination menswear concept, which launched at its Southampton store last year, would now be rolled out to all shops. It will go into four shops this year and London Oxford Street next year.
Street also revealed that while own brand was much valued, it had its limitations in his vision for the future of John Lewis. "Our own brand has been very successful, but it won't work in all parts of our offer," he said. "We are constantly looking at where it is appropriate to do it. We also plan to launch an own-brand women's footwear and accessories offer before the end of the year."
Own brand was largely performing well, he said, while branded menswear like-for-likes were up 18% and womenswear up 4.2%. Street added that the retailer was examining the balance of branded and own-brand product on kidswear, which had not been gaining market share. He also hinted that a new brand advertising campaign was in the pipeline for the end of the year.
A look at Street's CV proves he is not just an HR man or an unknown quantity, but is well rounded in supply chain, store operations and people. As one analyst says: "With so much competition for that job, they would hardly appoint a duffer to the role."
Seymour Pierce analyst Richard Ratner was impressed with Street's first time in the spotlight. "He's a good egg and a nice bloke," he says. "It's obvious he is devoted to the business and is terribly enthusiastic."
But enthusiasm will not be enough for Street, who must lead John Lewis through the most aggressive expansion in its history.
JOHN LEWIS BY NUMBERS
- John Lewis sales up 10.6% to £2.7 billion
- Like-for-like sales up 10.3%
- Profits at John Lewis stores up 38% to £264 million
- John Lewis Direct up 64% to £185m
- John Lewis Partnership group sales up 11% to £6.4bn
- Group pre-tax profit up 27% to £319m
- Partnership bonus up 29% to £155m, 18% of salary
A CLOSER LOOK AT THE FIGURES
- The 11 top-performing stores took more than £100m each
- Best-performing store was Solihull, with sales up 14%
- Womenswear up 4.2%
- Menswear, leisure and beauty up 9%
- Kidswear, toys and crafts down 1.1%
- John Lewis own-brand sales up 26% (19% last year)
- Marketing spend up 23%
- Stock turn improved by 11%
Figures for year to January 27 2007
ANDY STREET - THE CV
1985: Joined John Lewis Partnership in various in-store roles
1988: Assistant to the director of research and expansion
1993: Managing director of John Lewis, Milton Keynes
1998: First managing director of John Lewis, Bluewater
2000: First head office role as John Lewis supply chain director
2002: Appointed to the JLP board as director of personnel
Feb 2007: Promoted to managing director of John Lewis.