Following today’s release of John Lewis & Partners’ figures for the 26 weeks ending 30th July 2023; Zoe Mills, lead retail analyst at GlobalData, a leading data and analytics company, offers her view: “John Lewis & Partners has succumbed to the pressures of the cost-of-living crisis, as the mid-market player struggled to retain appeal in a retail market plagued by consumers seeking low prices. Indeed, as was noted this time last year, a marked improvement in H2 will be needed to improve its fortunes – something that could be feasible, though challenging, as it comes up against weaker comparatives. Early warning signs hint that John Lewis Partnership may not reward its partners with a bonus in this financial year as it focuses on modernising the business, improving customer services and doing more for partner pay. And while this will be disappointing, it is not unexpected given the losses generated in the period. Losses before tax and exceptional items for the business improved from £66.8m to £57.3m, but the department store retailer noted that it will take two more years to complete its transformation plan.
“Physical stores continue to outperform online, as John Lewis & Partners saw a shift back post-pandemic – though this is beginning to decelerate. Shop sales were up 2% in H1 FY2023/24, while online fell 4%. 57% of sales remain online and John Lewis & Partners’ presence is much more limited with 34 stores plus an outlet location, ensuring the department store retailer’s success continues to ride on a seamless online proposition. Indeed, John Lewis & Partners noted that consumers were drawn to its stores for services, with styling appointments up 27% and nursery consultations up 17%. Replicating this service element online is something it should develop given its limited physical reach in the UK as this will improve the weaker conversion seen online during this period.
“As was the story in FY2022/23, home and technology departments suffered while fashion and beauty sales rose – by 3% and 2%, respectively. These results in fashion are similar to those seen by Next for the 26 weeks to 29 July, where the clothing specialist reported full price sales up 2.9%, indicative of a more buoyant market. However, while the time period is not directly comparable, Marks & Spencer appears to be performing better with its Clothing & Home sales up 6% for the 19 weeks to 12 August. The smaller-ticket nature of fashion and beauty ensured shoppers could treat themselves to smaller luxuries despite the need to limit non-essential spending amid the cost-of-living crisis. Yet, the introduction of interest-bearing credit, which is live online and will come to stores from mid-October, is a good way to combat consumers’ hesitancy to make big-ticket purchases, ensuring John Lewis & Partners remain competitive with the likes of Very and Currys – both of which have competitive finance options.”
