Following today’s release of John Lewis Partnership results for FY2020/21; Zoe Mills, senior retail analyst at GlobalData, a leading data and analytics company, comments: “The John Lewis Partnership’s full-year results highlight parallels to Marks & Spencer, as its food & grocery business drives growth for the department store operator while its John Lewis & Partners arm underperforms, a result that would have been considerably more stark had it not been for its technology division. Despite Dame Sharon White confirming that partners would not be paid a bonus this year, the retailer did have a surprisingly better H2 2020/21 than was previously anticipated as demand over the peak Black Friday and Christmas period grew. However, its respectable group profit before bonus, tax, and exceptional items of £131m, hides the significant increase in exceptional costs (£648m) as it adapted to the COVID-19 pandemic through a greater shift to online as well as restructuring costs and changes to its head office.
“The role of online within its John Lewis & Partners business has drastically changed over this financial year, with the channel now accounting for 75% of total sales compared to 42% in FY2019/20, and is somewhat responsible for its only minor decline of 1.3% in revenue to £3,728m this year. Another reason is its strong electricals & technology division. Its tech category mix increased from 35% to 45% this financial year as TVs, computers and games consoles were in high demand. In comparison, reflective of the overall UK market, its fashion department suffered as demand for workwear and formalwear fell.
“Dame Sharon White has bold plans for the department store, with the retailer’s five-year Partnership Plan announced in late 2020, highlighting that it is willing to adapt to the changing retail landscape. Its plans to expand into smaller local stores containing the ‘very best of John Lewis’, will appeal to shoppers looking for greater convenience as well as increasing its reach among customers that are not in the catchment of its bigger department store estate. It had already announced the closure of eight stores after the initial lockdown in the UK earlier in this financial year, but further permanent closures are imminent as increased costs threaten more locations.
“In stark contrast to its non-food business, Waitrose & Partners has had a strong year, with revenues up 10.5% to £7,044m, despite seven store closures during the period. Growth has been driven by a fourfold increase in sales through Waitrose.com, with online grocery sales also up 182% during the peak trading period. The grocer’s online strategy has evidently paid off, with the online channel mix now 14% compared to 5% in FY 2019/20 (excluding sales to Ocado). Its trial partnership with Deliveroo has also appealed to a new younger shopper and given its success should be expanded upon in its new financial year. With other grocers focusing on price and value for money, evident by price investment and price-match schemes from the likes of Tesco and Sainsbury’s, Waitrose & Partners must still ensure that its point of difference is firmly outlined to remain relevant to its widening customer base.”