Following today’s release of John Lewis & Partners’ figures for FY2022/23 ending 28 January 2023; Zoe Mills, lead retail analyst at GlobalData, a leading data and analytics company, offers her view: “As a midmarket player operating amidst the cost-of-living crisis in the UK, this financial year was always set to be tough for John Lewis & Partners. Indeed, in its H1 FY2022/23 results, John Lewis Partnership stated that it would need a significantly stronger performance in the second half of the year, beyond what it typically achieves, if it was to be able to issue its bonus to partners. This was not realised, and the bonus has not been awarded at a time when this would have been much desired. The John Lewis Partnership has reported a loss before Partnership Bonus, tax and exceptional items of £78m, down from a profit of £181m the prior year, with a decline in trading operating profit across both Waitrose & Partners and John Lewis & Partners playing a significant role in this.
“While both of its fascias saw a decline in trading operating profit, its John Lewis & Partners held up comparatively better, with total trading sales (including VAT) up 0.2% in FY2022/23. This was driven by strong store performance as shoppers transition back to physical locations, with store sales up 20% year-on-year. Investment in its stores, as seen by the redesign of its Horsham store showcased this week, will be integral to retaining appeal as online performance continues to be weaker post-pandemic. Yet, with Dame Sharon White hinting at the impact that efficiencies could have on the number of partners, maintaining a high level of customer service will be essential in supporting store sales going forward and training its partners must be prioritised.
“While both home and technology sales are forecast to have declined around -5% and -10% respectively, its fashion division was its strongest category, with sales up approximately 10%. This will have been driven by its clear pricing strategy of good, better, best. Having culled its ‘Never Knowingly Undersold’ price promise at the beginning of this financial year, John Lewis & Partners has invested £500m in pricing. Within its fashion division, it has also been successful in enticing shoppers into stores via its ANYDAY range, highlighting how integral its investment in a more entry-level brand was. Over 70% of ANYDAY customers also bought its mid-tier John Lewis & Partners own brand and more than 75% also bought branded items in the past year proving that consumers are increasingly investing in fewer quality items.
“Despite John Lewis & Partners reporting positive momentum over the peak period, FY2023/24 looks challenging. With it having reported positive momentum over the peak period, in 2023, consumer spending power may falter given the prevalence we have seen in the Christmas period having been funded by credit options and savings. Further expansion of ANYDAY will be crucial if it is to deter shoppers from switching to cheaper retailers.”
