Jan 6, 2016
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John Lewis' strong Christmas driven by department stores

Jan 6, 2016

Britain's John Lewis Partnership maintained its full-year profit guidance thanks to a strong Christmas performance from its department stores which reported robust fashion sales despite a mild start to winter.

The department stores helped to offset a more subdued performance from the group's upmarket supermarket chain Waitrose.

The John Lewis trading statement also contrasted sharply with one from clothing retailer Next which began the post-Christmas reporting season on Tuesday with a disappointing update. Next blamed Britain's unusually warm weather in November and December for a sharp slowdown in sales growth.

The John Lewis Partnership, whose worker co-ownership model has been lauded by Prime Minister David Cameron, has been the star performer of Britain's retail sector for the last six years, helped by a strong online operation and modern stores, many of which are in the more prosperous south east of England.

The group said on Wednesday that sales at Britain's largest department store chain increased 6.9 percent year-on-year to 951 million pounds in the six weeks to Jan. 2 and were up 5.1 percent at stores open over a year.

All three of its main product areas showed good sales growth, with fashion up 6.1 percent, home rising 5.1 percent and electricals and home technology increasing by 9.6 percent.

Marks & Spencer, Britain's biggest clothing retailer, will update on Christmas trading on Thursday, with analysts forecasting another decline in sales.

"The difficulty in going second in the (Christmas) results (reporting) is we don’t know others yet. But I suspect when the ink is dry our fashion result will look really good against the market," John Lewis Managing Director Andy Street told Reuters.

The department stores' overall online sales increased 21.4 percent over the six weeks, representing 40 percent of total sales. Store sales fell 1.2 percent.

Waitrose's gross sales, excluding fuel, were 859.8 million pounds, up 1.2 percent compared with last year and down 1.4 percent on a like-for-like basis.

Waitrose noted that peak festive trade came particularly late and was more concentrated than usual in the last days before Christmas. Three of Britain's major supermarket groups, Tesco, Sainsbury's and Morrisons, are due to update on Christmas trade next week.

Total John Lewis Partnership sales rose 4.1 percent to 1.81 billion pounds.

"This has been a strong Christmas trading period for the Partnership despite the non-food market seeing significant shifts in trade patterns and the grocery market continuing to be challenging," said Chairman Charlie Mayfield.

He said expectations for profit before partnership bonus, tax and exceptionals for the year Jan. 30 2016 remain unchanged at between 270-320 million pounds versus 342.7 million pounds last year.


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