John Lewis Partnership's annual profit declines by 21.9 percent

John Lewis said in its unaudited report for the full year that sales outperformed the BRC market by 1.4 percent with market share increase in fashion, home and electricals & home technology (EHT). Gross sales were up 2.2 percent to 4.84 billion pounds (6.7 billion dollars), with like-for-like sales growth of 0.4 percent. Fashion sales were up 3.2 percent, boosted by a particularly strong performance in womenswear, up 5 percent, buoyed by the company-owned brand womenswear, up 14.9 percent. However, Profit before partnership bonus, tax and exceptional items was down 21.9 percent to 289.2 million pounds (401 million dollars), largely due to lower gross margins in Waitrose driven by the weaker exchange rate and commitment to competitive pricing.

Commenting on the company’s performance, Sir Charlie Mayfield, Chairman of John Lewis Partnership, said in a media release: "As we anticipated, 2017 was a challenging year. Consumer demand was subdued and we made significant changes to operations across the Partnership, which affected many partners. However, their hard work throughout the year was key to delivering gross sales of 11.60 billion pounds, up 2 percent, with like-for-like increases in both Waitrose and John Lewis. However, profit before Partnership Bonus, tax and exceptional items was down 21.9 percent mainly as a result of intensifying margin pressure in Waitrose.”

John Lewis operating profit improves 4.5 percent

Operating profit before exceptional items for the period was 254.2 million pounds (352.7 million dollars) up 4.5 percent. Customer number increased by 2.5 percent to 12.6 million. As part of its drive to improve customer experience, the company introduced a number of initiatives including two-hour delivery slots, online order tracking and the ability to see more detailed product information and branch stock availability online. In addition, Experience Desks were launched in four shops providing customers with 'concierge style' services to help them make the most of John Lewis.

“We said in January 2017 that we were preparing for tougher trading conditions with weakness in sterling feeding through into cost prices, putting pressure on margin, and much higher exceptional costs as a result of an acceleration of planned changes. This was why we chose to reduce the proportion of profits paid as partnership bonus last year so as to absorb these impacts while continuing to invest in the future and in strengthening our balance sheet. I am pleased to say that despite lower profits, strong cash flow has enabled us to reduce our total net debts. Partnership Bonus has been awarded at 5 percent,” added Mayfield.

The company also launched first in-house denim lifestyle brand for women – And/Or in March 2017 and built on the success of its luxury own label, Modern Rarity, including a collaboration with Eudon Choi. The company’s home sales were down 0.8 percent, while EHT sales rose 2.6 percent.

In 2018, John Lewis focus on increasing the share of company-owned labels and open stores in White City and Cheltenham.

John Lewis expects trading to remain volatile in 2018/19

For the first five weeks of the year, the company said, Partnership gross sales were up 0.6 percent on last year, while John Lewis gross sales were down 2.8 percent and down 3.4 percent on like-for-like basis due to the heavy snow last week.

John Lewis expect trading to be volatile in 2018/19, with continuing economic uncertainty and no let up in competitive intensity and anticipates further pressure on profits.

Picture:John Lewis website


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