John Lewis expected to outshine high street

John Lewis, often seen as a bellwether of the high street, has reported a 13 per cent increase in sales over the five weeks of Christmas trading, but observers expect the wider retail sector will see “minimal” uplift.

John Lewis 2012 Christmas ad
John Lewis reports strong performance over Christmas.

The department store says same store sales reached £684.8m in the five weeks to 29 December compared with the same period last year. Same store sales increased 20 per cent on a like for like basis compared with two years ago.

Online sales, which now account for a quarter of all John Lewis’ business, increased 44.3 per cent year on year.

Sales in the final week before Christmas to 22 December increased 26.5 per cent year on year to £157.8m, breaking £150m for the first time.

Andy Street, managing director of John Lewis, says: “In an economic climate which continues to be volatile, to have achieved these results is testimony to the strength of the John Lewis brand and the commitment of all our partners to give outstanding service.”

There is likely to only be a minimal uplift in sales during the festive period when the impact of inflation is taken into accoun according to the British Retail Consortium. A spokesperson for the BRC says it is expecting only a “modest” increase in spending in cash terms.

He adds that while it is always good to see retailers returning strong results, as in John Lewis’ case, there will always be winners and losers.

“Lots of retailers have been good at matching their offer to what consumers want but there will be others that haven’t done that as well and the sums won’t add up,” he says.

The BRC will report its official figures on Monday (7 December).

Early indicators of post-Christmas sales performance show that clearance events began strongly. Insight from Experian shows that Boxing Day was was the “biggest and busiest” ever for online retailers in the UK with a 17 per cent uplift in visits to retail sites. A separate study by IBM found that online sales on Boxing Day (26 December) increased 44 per cent year on year.

The retailer also reported record sales of £31.7m on the first day of its clearance sale event on 27 December.

Chris Withers, head of Smarter Commerce UK, IBM, says: “This comes as no surprise. Retailers started their promotions early this year, but shoppers have still been holding out for the best prices around and after Christmas. Going online is one way of ensuring they get these deals.”

Despite this, 2013 is expected to be another difficult year for retailers. The number of insolvencies increased 6 per cent in 2012 compared to 2011, according to Deloitte with a number of big name retailers such as Comet going out of business. There is speculation that ailing retailer HMV may fall into administration later this week. HMV was unavailable for comment at the time of writing.

Lee Manning, restructuring services partner at Deloitte, says: “These figures are a stark reminder of the difficulties that continue to face the high street. Constrained household budgets and the structural challenges facing the sector mean it is certain that we will see further distress next year.”

A survey by retail consultancy Conlumino on 30 December found that more than half (59 per cent) of consumers expect to cut spending in the next six months. Only 2.6 per cent plan to spend more.

Almost half (46.9 per cent) think the economy will get worse in the first half of the year and almost a third of UK households expect their personal finances to deteriorate.

Towards the end of the year, GfK’s monthly index found that consumer confidence slumped in November.

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