Booming online grocery sales at Waitrose over the festive period have been hailed as a “key milestone” by John Lewis Partnership chairman Charlie Mayfield.
Mayfield said he hoped 2020 would be a year of “dramatic growth” for the supermarket’s online business.
It comes as Waitrose reported a 0.4% increase in like-for-like sales in the seven weeks to 4 January 2020. Mayfield said the result was “comfortably the best reported of any supermarket and, we believe, well ahead of the market”.
However, a 2.3% slump in sales at John Lewis, as the department store suffered from turmoil on the British high street, soured the group results.
The group also issued a profits warning that led to uncertainty over whether JLP staff would miss out on their annual bonus for the first time since 1953. Profits at Waitrose are expected to be flat for the year and John Lewis will reverse first-half losses, but full-year profits across the group are forecast to be “significantly” lower.
“The partnership board will meet in February to decide whether it is prudent to pay a partnership bonus,” Mayfield said. “The decision will be influenced by our level of profitability, planned investment and maintaining the strength of our balance sheet.”
JLP also announced this morning the shock departure of John Lewis boss Paula Nickolds, who has been with the business for 25 years. Nickolds had been set to take up the newly created role at the partnership of executive director of brand – responsible for John Lewis and Waitrose – in February, following a drastic restructuring announced in October last year, which also included Waitrose MD Rob Collins leaving the business.
“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,” Mayfield said.
Waitrose gross sales were down 1.3% to £1bn over the seven weeks to 4 January, which the business blamed on the closure of 12 of its stores.
Online food sales at Waitrose jumped by 16.7% over the period and by 23.4% in the seven days to Christmas, with average basket sizes increasing.
“Our online performance was really excellent,” Mayfield said. “To post a 24% increase in the week before Christmas, on the back of what is always a big step up in volume, is a lot. The vast majority was delivered from our shops. It was a key step in our milestone plan to hit the capacity levels we want to achieve to drive, what we hope, will be dramatic growth in Waitrose online next year when Waitrose and John Lewis sites will be the only places where you can buy Waitrose products online.”
Mayfield added that the 0.4% increase in like-for-like sales at Waitrose was the result of “a very good trading operation”.
“Over the course of the previous year the Waitrose team have conducted a whole load of category reviews, so we went into this Christmas with our assortment in great shape, with the right product at the right price and well presented, with high levels of availability. And operationally within our shops the performance was excellent.”
Total JLP sales for the period fell 1.8% to £2.2bn as a result of the slump at John Lewis and the store closures at Waitrose.
John Lewis beauty sales were up 4.7%, which Mayfield said was “comfortably ahead of the market”, with overall fashion sales up 0.1%. Home sales were down 3.4% and electricals & home technology sales were down 4%. Mayfield added there was significant variation in levels of demand over the period, with Black Friday sales up 10%, followed by more subdued demand in the subsequent weeks.
“I can’t say I’m proud of our profit performance this year, but I am actually hugely proud of the partnership and the thousands of brilliant people we have in this business,” he said. “They are a tough, professional and really realistic team. And what we have with Future Partnership is a platform and a team in place for a period of renewal under Sharon’s [White] leadership.”
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