John Lewis sales and profits rise as it grabs market share

The department store division said underlying operating profits before restructuring costs rose 9.9% to £50.1m in the half year to July 27. However, total operating profit fell 23.9% to £34.7m after the retailer invested £15.4m in streamlining its store management structure and new distribution facilities.

First-half revenue at John Lewis rose 6.5% to £1.37bn. Sales through its stores increased by 3.4%.

Online sales rose 17.1% to £439.9m as the retailer hit its £1bn annual online revenue target a year early.

John Lewis said its growth was fuelled by market share gains across each of its core categories despite being up against touch comparatives that include the digital switchover and Queen’s Jubilee.

In electricals and home technology the retailer achieved a record market share of 7.6% and a sales increase of 15.7%.

In fashion it recorded growth of 4.2%, boosted in part by its own-brand collections.

Sister grocer Waitrose posted a 6.9% increase in like-for-like sales while operating profit rose 12.8% to £160.2m.

Total sales rose 8% to £2.85bn while online sales rose 40.6%. Customer transactions rose by 9.3% in the first half.

Waitrose has outperformed the average grocery market growth for more than four years and its market share now stands at 4.9%, 0.3% higher than a year ago. “Outstanding value combined with quality, trusted provenance, high standards of service and innovative marketing led to a strong overall
performance,” the grocer said.

Waitrose also attributed its strong growth to its Brand Price Match promotions which matches prices against Tesco.

Waitrose managing director Mark Price told Retail Week there is “goodwill on all sides” between Waitrose, Ocado and Morrisons. Waitrose lawyers are looking at Ocado’s contract to provide the technology for Morrisons’ online food launch.

John Lewis Partnership chairman Charlie Mayfield said: “The partnership has had a strong first half with sales up 7.3% and profit before exceptionals up by 3.9%, slightly ahead of our expectations due to a good trading performance in both businesses.

“I am particularly pleased that both Waitrose and John Lewis again increased their market shares significantly during the first half.

“We are committed as a Partnership to developing our business for the long term, building the capabilities of our Partners and being innovative in products and services for our customers.

“As part of this, we have made further encouraging progress in what I referred to in March as our “quiet revolution” – the investment and restructuring in areas of our retail operations, supply chain, IT and support functions.”

The retailer reported that in the six weeks so far of the second half, partnership gross sales are 5.3% higher than last year. Waitrose like-for-likes are up 4.4% and John Lewis like-for-likes are up 5.1%.

Mayfield said: “Looking ahead, I’m encouraged by progress this year and am confident of the plans we have in place for Christmas. Despite a strong second half last year, both during the Olympics and at Christmas, I expect us to trade positively in the second half.”