John Lewis e-sales surge but totals drop, strategic review accelerates

By

Barbara Santamaria

Published
Apr 21, 2020

UK department store chain John Lewis has warned that sales could fall by as much as 35% this year as a result of the Covid-19 outbreak.

The retailer revealed on Tuesday that sales have plunged by 17% since the middle of March, when it was forced to shut its stores to help contain the virus.

A significant spike in online sales, up 84% year-on-year since the middle of March, has failed to offset the loss of trade in stores selling non-essentials (its Waitrose supermarkets have remained open). Additionally, consumers are buying more work-from-home technology, cookware and children’s toys, which are less profitable than other categories. “We are buying more Scrabble but fewer sofas,” said chair Sharon White in a letter to staff.  

As a food retailer, Waitrose is faring better. Sales have grown by 8% since 26 January, as consumers have stocked up on rice, pasta, long life milk; home baking; frozen foods and cleaning products. Still, the brand could see sales fall by up to 5% this year in a worst-case scenario. 

More than 14,000 staff have been placed on furlough, but John Lewis Partnership said they will continue to receive full contractual pay until the end of May. And in an effort to show its commitment to the partners, the company announced that those who are still at work (excluding senior managers) will receive a one-off £200 bonus.

Negotiations with landlords are currently under way to secure rent rent reliefs and a switch to monthly payments, and marketing spend will be reduced by nearly £100m. John Lewis will also lower its planned stock intake to reflect the slower sales and preserve cash. 

Additionally, Sharon White has announced that a strategic review of the business will be accelerated and will be due for completion by the summer. Among others, it will take into account changes in consumer behaviour post-Covid-19, such as a more pronounced shift to online and a desire to shop in more sustainable ways.

“The partnership has been trading for nearly a century. It has survived a world war and bombings, economic crashes and crises. Thanks to you, we shall also come through Covid-19 too and emerge stronger,” White said.