Full-year sales at John Lewis stores could fall 35 per cent
Full-year sales at John Lewis could fall around 35 per cent, around double the current level, as the department store faces a significant drop in demand due to the coronavirus pandemic.
The department store said a 35 per cent drop would be the worst case scenario, assuming a significant drop between April and June, and weak sales thereafter.
Waitrose sales would see a more modest decline of less than five per cent.
Trading at John Lewis has been mixed since 26 January. Waitrose sales have grown eight per cent with rice, pasta and long life milk the products most in demand.
Demand for home delivery has been especially strong and the supermarket has increased its capacity by 50 per cent, ahead of the ending of its contract with Ocado in September.
In John Lewis, trading has been mixed. With stores closed, online sales are substantially up, increasing 84 per cent year-on-year since the middle of March. The highest demand has been in areas linked to working and living at home like technology and food preparation. However the department store said there are less profitable lines: “We are buying more Scrabble but fewer sofas.”
Overall, sales at John Lewis are down 17 per cent year-on-year since the middle of March, and down seven year-on-year since 26 January.
Although online sales have spiked it has not been enough to offset the loss of shop trade. Demand at Waitrose has risen sharply but operating costs have increased too, as it expands online delivery.
John Lewis has already taken steps to preserve liquidity, including cutting back on marketing spend by close to £100m. It has furloughed more than 14,000 partners and is in the process of negotiating rent relief with landlords.
Chairman Sharon White said the strategic review announced in March will be accelerated to be completed by the summer.
She said: “It will seek to take account of changes in consumer behaviour to come out of the pandemic, such as a more pronounced shift to online and a desire to shop in more sustainable ways.”