Following today’s release of John Lewis & Partners’ figures for H1 FY2021/22; Zoe Mills, senior retail analyst at GlobalData, a leading data and analytics company, offers her view: “John Lewis & Partners’ H1 FY2021/22 reflects its recovery after a year hampered by the COVID-19 pandemic. Total H1 revenues were up 10.8% to £1,638m, albeit against a weak comparative; however, with sales up 1.6% on a two-year basis, despite stores being closed for 10 weeks, John Lewis & Partners has reported a solid performance. Growth in both its John Lewis and Waitrose fascias has helped the retailer to narrow losses, with a loss before tax of £29m compared to £635m in H1 FY 2020/21. Indeed, without the restructuring costs associated with the closure of eight of its John Lewis & Partners stores, profit before exceptional items was £69m (up £124m on the previous year) and it must continue this momentum as it enters H2. However, the pressure is ramping up due to supply chain challenges and labour shortages ensuring it must strike a balance between protecting profits and continuing its focus on value for money to appeal to shoppers.
“In contrast to its last set of results, where technology sales were the key driver of growth, it was both home and fashion departments that outperformed at John Lewis & Partners during the period (up 23% and 22% respectively) as consumers invested in updating their homes and the reopening of hospitality encouraged many to update their wardrobes. The first half also marked the introduction of its new low-price home range, ANYDAY, with this brand contributing £56m to sales. John Lewis & Partners must attract home shoppers that would not typically consider the retailer and highlight the quality of these new lower-priced items. This range will be essential to compete with the likes of IKEA and Dunelm and capitalise on consumers’ investment in their homes. While outside of these results, September marked the extension of its ANYDAY brand into clothing, and despite still being in its infancy the appeal for a low-price own-brand in this sector is less clear. John Lewis & Partners’ draw is for brands such as Barbour, Reiss and Whistles and with the ANYDAY range predominantly including basics such as loungewear and underwear, it will need to have a clear message for consumers regarding its value for money credentials.
“John Lewis & Partners’ online channel continues to play a significant role in its proposition, accounting for 74% of total sales (down 2.0ppts from H1 FY2020/21), indicative of the temporary store closures in the period but also the long-term impact of the COVID-19 pandemic and how consumers choose to shop. While online penetration is likely to fall further as consumers make more regular trips back to stores, the downsizing of its store portfolio highlights the importance of this channel to the department store retailer and its willingness to adapt to the changing retail landscape. Continued investment, such as its relaunched MyJL app planned for H2, can only support further growth.”
Paul Kirkland, retail and hospitality business development director at Fujitsu, said: “With their closure of stores at the beginning of the year, John Lewis was another department store hit hard by the pandemic. However, today’s uptick in results shows that the decision to reduce their brick-and-mortar overheads has placed them in good stead, with their profits only likely to increase once the flurry of seasonal shopping begins.
“As John Lewis has been the cornerstone of British retail since the 19th century and is synonymous with exceptional customer service, a loyal customer base will continue to visit in-stores. However, more than a friendly welcome is needed to retain them, and a sharp focus on data-sets regarding footfall will enable senior decision-makers to find ways to improve the shopping experience, which may take the form of cutting queue times, providing further discounts or even devising immersive events. Leveraging this data will also assist in store location intelligence; enabling branches’ pain points to be dealt with before they present real challenges.
“However, as with all department stores in the UK, a continued investment in eCommerce is now essential and no longer a ‘nice to have’. John Lewis must devise an online strategy that aligns with the demands of the modern, younger customer; especially as they are now competing with the ever popular online marketplaces that have boomed during the pandemic. Similarly, this approach will also attract the latest fashion, beauty, tech and homeware brands to invest in a partnership with John Lewis, in turn allowing them to stay relevant and generate further profits.
“As John Lewis gear up for Christmas and looks to recruit temporary workers to cater for demand, the omnichannel must be mastered and consistently evolve to ensure the customer experience across all of their channels thrive in order to avoid any potential shortcomings in December.”