John Lewis Partnership Plc has released its full year results for the 52 weeks ended January 27, 2018.
For the first five weeks of the year, Partnership gross sales were up 0.6% on last year. Waitrose gross sales were up 2.7% (up 2.4% like-for-like, excluding fuel) and John Lewis gross sales were down 2.8% (down 3.4% like-for-like). Sales were significantly impacted, particularly in John Lewis, by the heavy snow last week.
"We expect trading to be volatile in 2018/19" the company reports, with continuing economic uncertainty and no let up in competitive intensity. It is also anticipated that there will be further pressure on profits. However, the Partnership "will see benefits this year from the many changes we implemented in 2017/18", and the faster delivery of key innovations.
John Lewis has reported a "strong year", with sales outperforming the BRC market by 1.4% and market share increasing in Fashion, Home and Electricals and Home Technology (EHT). Gross sales were up 2.2% to £4.84bn, with like-for-like sales growth of 0.4%. Operating profit before exceptional items was £254.2m up 4.5%. "We continued to improve productivity across the business and leveraged investments made in recent years in our distribution network," the company has said.
Against a "backdrop of a challenging market", Home sales were down 0.8%. This was reported as predominantly driven by soft demand in more considered categories such as Fitted Furniture, Fitted Flooring and Upholstery. Conversely, Outdoor Furniture performed well.
Chairman of John Lewis Partnership, Sir Charlie Mayfield, commented: "As we anticipated, 2017 was a challenging year. Consumer demand was subdued and we made significant changes to operations across the Partnership which affected many Partners. However, their hard work throughout the year was key to delivering gross sales of £11.60bn, up 2.0%, with like-for-like increases in both Waitrose and John Lewis. However, profit before Partnership Bonus, tax and exceptional items was down 21.9% mainly as a result of intensifying margin pressure in Waitrose.
"We said in January 2017 that we were preparing for tougher trading conditions with weakness in Sterling feeding through into cost prices, putting pressure on margin, and much higher exceptional costs as a result of an acceleration of planned changes. This was why we chose to reduce the proportion of profits paid as Partnership Bonus last year so as to absorb these impacts while continuing to invest in the future and in strengthening our balance sheet. We did both and I am pleased to say that despite lower profits, strong cash flow has enabled us to reduce our total net debts."
John Lewis operates 49 John Lewis shops across the UK (35 department stores, 12 John Lewis at home and shops at St Pancras International and Heathrow Terminal 2) as well as johnlewis.com.