John Lewis Partnership continues to invest in omnichannel as half-year sales rise but profits fall

The John Lewis Partnership this week said it would keep investing in omnichannel technology in both its Waitrose and John Lewis businesses as it continues its focus on the customer experience.

The group said that it was committed to delivering an omnichannel strategy that aims to adapt as the way that customers shop continues to change. At John Lewis, it said it put “record capital investment in the essentials of omnichannel trading as we go into our most important peak trading period.”

The update came as John Lewis Partnership reported sales of £5.3bn in the half-year to July 30. That’s 3.1% ahead of the same period last year. Pre-tax profits before exceptional items came in at £82.4m, 14.8% down on the same time last year.

Waitrose sales of £3.2bn were 2.2% up on last time, although like-for-like sales, a measure that strips out the effect of store openings and closures, fell by 1%. Online sales rose by 4.3% in a half-year that saw the supermarket move to grow its exports. A deal with the Alibaba Group takes Waitrose products into China for the first time, while a partnership with the pureplay British Corner Shop means people in more than 100 countries are now able to buy more than 2,000 Waitrose product lines. Operating profits of £96.3m were 28.9% down on last time.

John Lewis sales of £2.0bn were 4.5% ahead, and like-for-like sales were up by 3.1%. Online sales took a larger proportion of total sales, rising to 34.5% from 30.6% at the same time last year, while store sales fell by 1%. Nonetheless, said the retailer, 65.5% of merchandise sales are still made in branches, and three-quarters of its customers buy in shops. Its strategy for shops, it said, was rooted in the customer experience and in convenience.

Operating profits of £32.4m were down by 31.2% on last time. The retailer said more than half of the fall was down to “transitioning costs” in its distribution network as the business moves further towards online fulfilment. The company is keeping legacy distribution sites open while its new Magna Park campus, set to open this month, will support a more omnichannel approach to order deliveries and collections.

Sir Charlie Mayfield, Chairman of John Lewis Partnership, said: “We have grown gross sales and market share across both Waitrose and John Lewis, but our profits are down. This reflects market conditions and, in particular, steps we are taking to adapt the Group for the future. These are not as a consequence of the EU referendum result, which has had little quantifiable impact on sales so far. Instead there are far reaching changes taking place in society, in retail and in the workplace that have much greater implications.”

John Lewis is an Elite retailer in IRUK Top500 research, while Waitrose is a Leading retailer.

• Meanwhile, supermarket Morrisons reported rising sales and profits and said it was making good progress on its fix, rebuild and grow transformation plan. The retailer, which is growing its online business through partnerships with Amazon and Ocado, today reported pre-tax profits of £143m in the first half of its financial year, 13.5% ahead of the same time last year, on sales of £8.032bn that were slightly from the £8.064bn reported at the same time last year.