Bloomberg News

John Lewis Has ‘Outstanding’ Holiday as Chain Gains Share

January 04, 2012

(Updates with extension of price pledge in third paragraph, analyst comment in fourth.)

Jan. 4 (Bloomberg) -- John Lewis, the U.K.’s largest department-store chain, reported “outstanding” growth in Christmas revenue as a pledge to match competitors’ prices and online sales fueled market-share gains for all product groups.

Sales at stores open at least a year rose 6.2 percent in the five weeks ended Dec. 31, the London-based company said today. Total revenue at the employee-owned operator of 35 stores jumped 9.3 percent to 596 million pounds ($933 million).

Market-share gains in departments including electrical goods, fashion and home furnishings were helped by John Lewis’s “Never Knowingly Undersold” policy, which was introduced in 1925 and was extended in 2010 to match online rivals such as the Comet electronics chain. Next Plc, the second-largest U.K. clothing retailer, today reported what it termed “disappointing” sales after avoiding pre-holiday discounts.

“They are impressive numbers,” Simon Irwin, a retail analyst at Liberum Capital in London, said of John Lewis’s sales. “Still, we know they promoted very hard and post- Christmas clearance has been big for everyone.”

The chain, a unit of John Lewis Partnership Plc which also operates Waitrose grocery stores, will focus on better service and competitive prices to attract customers as 2012 will “undoubtedly be challenging and economic conditions volatile,” Managing Director Andy Street said in the statement.

VAT Effect

The retailer’s “click and collect” service, which lets customers order items online for delivery to 129 John Lewis or Waitrose outlets, posted 90 percent growth in usage in the five- week holiday period, Street said.

Revenue in the final week of December, the first week of John Lewis’s annual clearance, fell 4.8 percent to 101.3 million pounds. Business in the year-earlier period had been boosted by consumers making purchases in advance of a value-added tax increase, so “it was always going to be a challenge to match sales, particularly with ‘big ticket’ items,” Street said.

Next today reported total sales rose 3.1 percent in the 21 weeks ended Dec. 24, while forecasting slack profit growth in the financial year through January 2013 as the euro countries’ debt crisis and a credit squeeze restrict consumer spending.

--Editors: Tom Lavell, Paul Jarvis

To contact the reporter on this story: Sarah Shannon in London at sshannon4@bloomberg.net

To contact the editor responsible for this story: Sara Marley at smarley1@bloomberg.net


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