17 Sep 2020
Posted in Coronavirus
John Lewis & Partners shows willingness to adapt but bonus wiped out by COVID-19
Following today’s release of John Lewis & Partners H1 figures for 2020/21, Sofie Willmott, Content Head of Apparel at GlobalData, a leading data and analytics company, comments:
“Dame Sharon White has confirmed that John Lewis’ partners will not be paid a bonus this year, with the pandemic thwarting hopes of profitability for most retailers in 2020. Given over £200m of sales were lost from closing John Lewis stores during lockdown and COVID-19 led to additional costs on areas such as safety equipment, the retailer has understandably decided to hold on to any profit it has generated. However, despite delivering a respectable trading operating profit of £153m, this measure masks the full impact of the pandemic and once other costs are added in including central costs and exceptional items, the partnership (including Waitrose) made a loss before tax of £635m versus a profit before tax of £192m last year.
“John Lewis & Partners’ robust online operation has propped up the business in H1 FY2020/21 with online penetration rising above 60% versus 40% pre-pandemic and its prior investment in digital channels clearly paying off. The retailer has quickly adapted to the rapid changes in shopping habits and replicated many of its instore services online such as personal and home styling, and beauty and nursey advice, while also ramping up the number of fashion and beauty brands it stocks to improve its product range. Choosing not to reopen eight stores (16.0% of its physical estate) after lockdown and this week submitting plans to turn three floors of its Oxford Street flagship into office space demonstrates that the retailer is remodelling its business to fit with the evolving retail environment. Its willingness to change gives us hope that John Lewis & Partners will remain a key player in UK retail unlike its department store competitors, namely House of Fraser and Debenhams, whose future looks bleak given their hesitance to evolve and dwindling relevance.
“Despite revenue falling 8.3% (£133m) in H1 to £1,479m, John Lewis & Partners expects full year sales could drop 35% in a worst case scenario, highlighting the retailer’s concerns about the peak trading period. With many consumers already investing in home products and electricals equipment to enhance their time at home both during lockdown and working from home, sales will have been pulled forward and given UK coronavirus cases are rising, social occasions are likely to remain limited for the rest of 2020, hindering fashion spend.”