The John Lewis Partnership has sparked fresh hope of a consumer bounceback with a trading statement that sets its staff on course for bumper bonuses (see Commentary, facing page). The employee-owned retailer brought cheer to the high street and its employees with a surge in sales over the key Christmas period.
During peak trading, sales at its John Lewis department stores and Waitrose supermarkets rose strongly. Like-for-like figures have powered past levels seen in 2007, when the business’s 69,000 employees, or partners, earned a bonus of 20 per cent of their salaries.
At John Lewis, whose 29 stores are regarded as an important retail indicator, sales rose 15.8 per cent in total, or 12.7 per cent on a like-for-like basis, in the five weeks to January 2, against the same period last year. Still more encouragingly, takings are 10.4 per cent higher than in 2007, the year before the credit crisis battered sales.
A 20 per cent bonus would equate approximately to a £2,800 payout for the average John Lewis partner.
Waitrose sales surged 16.1 per cent in the 13 weeks to Boxing Day, or 9 per cent on a like-for-like basis. The ascent of Waitrose, the fastest-growing British supermarket, has been aided by strong take-up of its new value range, which has been credited with improving customers’ perceptions of its prices.
Andy Street, managing director of John Lewis, said: “We have seen excellent sales during Christmas and clearance … the five-week period has seen a number of records broken. Sales surpassed the £100 million milestone on four separate weeks.”
However, John Lewis expects a “long, slow recovery” this year.
Nat Wakely, director of selling operations, said: “We’re not going to see this following through in 2010 because so much will depend on macro [economic] conditions.”
Furniture sales were up 60 per cent over the Christmas period, suggesting that consumers who had put off discretionary spending during the recession at last felt able to spend, he added.
John Lewis’s takings may bode well for Next and Marks & Spencer, which will be the first big, publicly quoted retailers to update the market on their Christmas performances.
John Lewis’s fashion and homewares departments — the divisions with the biggest overlap with Next and M&S — have been its strongest-performing areas.
In the five weeks to January 2, fashion sales were up 22 per cent and homewares up 19.6 per cent.
The partnership was founded in 1928 when John Spedan Lewis, the son of the original John Lewis, began distributing profits to staff. The bonus is decided in early March and appears in the following month’s pay cheque.
At the end of the partnership’s financial year, its board, led by Charlie Mayfield, chairman, will decide how much profit to plough back into the business and how much to distribute to partners. This year the bonus pool will face stiff opposition as Waitrose has announced an ambitious target for opening convenience stores, while John Lewis aims to open more of its smaller At Home branches.
The pool will also be spread among more workers, the result of a new John Lewis store in Cardiff, a home- focused store in Poole and new Waitrose shops. The introduction of the cheaper value range, “essential Waitrose”, is also likely to have hit profit margins.
Following news of John Lewis’s figures, shares in Next, which updates the market today, rose by 56p, or nearly 3 per cent, to £21.39. Shares in M&S, which is providing an update tomorrow, rose by 10.4p to 412.4p.
Thank you Times