Nickolds in shock John Lewis exit, festive trading disappoints
The weekly sales reports that John Lewis Partnership has been issuing in recent periods haven't been that impressive for much of the time, even though there have been some weeks where the performance has been strong. So it was no surprise to hear of a sales dip in the company’s seven-week Christmas trading statement on Thursday.
But there was one big surprise in the announcement. At the end of it we heard that Paula Nickolds is stepping down from the board and will be leaving the company next month. Her departure coincides with the arrival of the company’s new chairman with Sharon White joining in February.
Nickolds has been with the Partnership for 25 years and was praised by outgoing chairman Sir Charlie Mayfield as he announced her departure. Having become MD of the John Lewis unit in late 2016, last October she was named Executive Director, Brand as part of the Future Partnership plan to take a more holistic approach to running the John Lewis and Waitrose units.
But on Thursday, Mayfield said: “After some reflection on the responsibilities of her proposed new role, we have decided together that the implementation of the Future Partnership structure in February is the right time for her to move on and she will leave the Partnership with our gratitude and best wishes for the future”.
Moving on from that, what did the trading update tell us? Gross sales at the group as a whole fell 1.8% to £2.167 billion in the period from November 17 to January 4.
The firm’s weekly reports had given a clear indication that the company wouldn't be in positive territory over the Christmas period and it seems that the John Lewis department stores chain was the worst performing arm of the business. Waitrose sales excluding fuel fell 1.3% but were up 0.4% on a like-for-like basis. However, the John Lewis chain fell 2.3% to £1.134 billion, with a 2% like-for-like drop.
The differences in performance of the two business units were made even clearer when it comes to online. The company said that Waitrose online sales rose by 16.7% and in the seven days before Christmas they were up 23.4%. But at the John Lewis chain, which several years ago was one of the UK retail sector’s strongest performers online, web sales rose only 1.4%.
Yet there were pockets of strength at John Lewis with beauty sales up 4.7%, comfortably ahead of the market, while the overall Fashion department (of which beauty is a part) edged up 0.1%.
However, the Home department saw sales falling 3.4% to continue a very weak run for this arm of the business, and Electricals & Home Technology sales were down 4%.
The company said it had seen “significant variation in levels of demand” with Black Friday sales rising 10% year-on-year, but more subdued demand in the weeks after.
This seemed to replicate the experience of many other companies in the UK retail sector, which were taken by surprise due to the strength of Black Friday but then had to endure slower demand during December.
So where will all this leave the company when it comes to reporting its full-year results? On Thursday, it said it expects profits at Waitrose to be broadly in line with last year but John Lewis will see profit substantially down year-on-year, although it expects to reverse the losses incurred in the first half.
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