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John Lewis predicts £1bn turnover online by 2014

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Decisions taken in tough financial times to invest in a business that reflects the varied new ways that customers want to shop are paying off, the John Lewis Partnership said this week as it predicted johnlewis.com, already responsible for almost a fifth of John Lewis sales, would hit £1bn in turnover by 2014.

Its interim results showed the partnership’s gross sales rose by £244.0m or 6.4% across the first half of the year to £4.05bn, but pre-tax profits were £90.4m, down by £20.1m or 18.2%, on last year, reflecting increased investment in the business. Capital expenditure rose by £99m to £254m in the period, the six months to the end of July. That investment includes the development of multichannel sales through new services, such as Click and Collect, and new formats, such as its home stores, which bring the online into the high street.

John Lewis gross sales rose by 2.5%, or £34.3m, to £1.42bn although like-for-like sales were up only by 1.0%, and operating profits fell by 54.5% to £15.8m, down by £18.9m. Meanwhile Waitrose gross sales rose by 8.7%, or £209.7m, to £2.63bn, while like-for-like sales were up by 4%. Operating profit was down here as well, at £110.2m, a fall of 13.8%, or £17.6m.

Charlie Mayfield, John Lewis Partnership chairman, said: “We have often said we are a business with a long-term outlook. Our sales momentum today has much to do with decisions taken to invest during similarly difficult market conditions in 2008 and 2009. Our profit performance in the first half reflects not only the extremely challenging trading conditions, particularly in John Lewis, but also the significant investments we are making to accelerate growth and to seize the opportunities created by the structural shifts in how customers are shopping.”

The first half saw a 27.2% growth in online sales at johnlewis.com, which now delivers to 33 countries and accounts for 19% of total John Lewis sales. Annual sales through the website are expected to hit £1bn by 2014. Future developments include the roll out of further Click and Collect collection points to reach 116 next month, including 84 in Waitrose stores.

Waitrose.com saw a 26.8% rise in sales when it launched its new technology platform in March. Waitrose is to open a new customer fulfillment centre in Acton for deliveries within the M25.

Meanwhile 16 new shops opened in the first half of the year, across both brands, compared to nine in the same period last year. They include eight Little Waitrose convenience stores, which the business sees as a complement to online deliveries, allowing shoppers to top up on fresh food between deliveries. There are currently 21 convenience stores but more than 300 are planned by the end of the decade.

Mayfield said: “Trading conditions are set to remain challenging through the rest of this year and into 2012. We are not simply waiting for the recovery, but instead we have increased the pace of investment and innovation across the Partnership putting us in the best possible position to seize the opportunity created by a rapidly changing retail environment. Our momentum is strong and I am confident we will build on that in the second half.”

Update: John Lewis finished the week by reporting a 36% rise in johnlewis.com sales in the week to September 10, helping to boost total sales across the business by 5.8%. Back to school sales was particularly strong, it said, with a 25% rise in childrenswear sales, and a 32% rise in children’s shoes.

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