John Lewis: no first half profits as it calls a halt to 'the relentless pursuit of greater scale'
John Lewis has called time on expansion as it warned on profits.
'The John Lewis Partnership is a unique business with different ownership, a different purpose and a different outlook to any of our competitors. As retail changes we need to tread a path that enables us to thrive as a business while building on the qualities that make us different. For us, the relentless pursuit of greater scale is not the right course,’ said Sir Charlie Mayfield, JLP chairman.
The group said the focus would be on differentiation, not scale.
‘At John Lewis, the focus will be in three key areas - unique products, personal service and expanding into new services. At the heart of the strategy is developing a curated and targeted assortment, which is increasingly unique to John Lewis. Key to this is supercharging women’s fashion, acquiring new niche brands, securing exclusives with international brands and significantly growing design capability. Customer reviews of John Lewis own brands this year exceeded that of other brands, scoring an average rating of 4.5 out of 5. Currently 30% of John Lewis’s sales are from products that are own-brand and exclusive products. Our ambition is to increase this to 50%,’ it said.
‘Our service will centre around creating an exceptional experience in shops, empowering partners through technology and investing in partner skills. Work has started to tap into the burgeoning customer demand for trusted advice and expertise in fashion and home. This is a significant opportunity and will play a major role in our shift to personalised service versus ubiquitous transactional shopping.
‘And John Lewis will expand beyond shops and online into new and enhanced services, with a focus on strengthening its position in the home services market and growing financial services.’
For Waitrose, the intention is to focus on core customers.
‘We expect the Partnership’s half year profits before exceptional items – which are always much lower and more volatile than the second half – to be close to zero this year. For the full year there are a wide range of possible outcomes, given the market uncertainty, but we are currently assuming that profits before exceptional items will be substantially lower than last year. The Partnership currently expects to see profit growth in Waitrose, a decline in John Lewis and significant extra costs at the Partnership level as a result of greater IT investment, which will be a big driver behind the overall profit change.’
From September the two brands that make up the business will be known as Waitrose & Partners and John Lewis & Partners.
‘Our plans put differentiation, innovation and partner led service at the heart of our offer. The measures that we have outlined today are an important next step in our strategy that will ensure we emerge stronger from this period of profound change,' said Mayfield.