John Lewis and Waitrose report ‘encouraging progress’ on five-year turnaround strategy

The John Lewis Partnership has reported strong results from its scheme to bring the John Lewis and Waitrose brands closer together, as well as from the launch of its value Anyday range.

John LewisDuring a year described by chairman Sharon White as “painful”, the John Lewis Partnership has managed to cut its losses over the first six months of 2021 to £29m, as the beleaguered business embarks on its five-year turnaround strategy.

The figure represents a significant improvement from the £635m loss it posted for the same period last year, underpinned by a 6% increase in sales across the Partnership, which encompasses the John Lewis and Waitrose brands.

“We’re in the first year of what is a five-year turnaround plan for the business, but we are encouraged by the early progress [and are] adapting quickly,” White said on a call with press today (16 September). “What we’ve seen is positive momentum in both brands.”

Key to the strategy has been the ‘Better Together’ scheme to better align the John Lewis and Waitrose brands, which included plans to trial John Lewis “inserts” in five Waitrose stores.John Lewis plots local strategy amid ‘economic earthquake’ of Covid

Some 17 Waitrose stores now have a dedicated, redesigned John Lewis space, which will rise to approximately 40 by the end of the year. Additionally, all merchandise sold in Waitrose will be sourced by John Lewis in time for Christmas, while joint ranges have been launched for the first time to bring together Waitrose food and drink with John Lewis homeware.

“We’ve had a really strong customer response,” said Waitrose executive director James Bailey, claiming one in five customers say they will shop more with Waitrose as a result of the tie-up.

The business also claims sales in stores with John Lewis inserts are higher, with sales of John Lewis products showing approximately 20% growth year on year compared to the previous ranges sold through Waitrose stores.

Bailey added that Waitrose is continuing to review opportunities in the convenience channel, in which the brand has been traditionally underrepresented.

So far this year the business has expanded its partnership with food delivery service Deliveroo to 150 supermarkets nationwide, with a potential reach of 30 million customers. According to Bailey, the partnership is helping to bring in a new audience of younger customers and generates £1m in sales a week.

The five-year ‘Partnership Plan’ aims to return the business to sustainable profit of £400m a year. The Partnership is investing up to £800m a year to support the transformation – an increase of approximately 40% on recent years – and has so far invested £334m during the first half of 2021.

Anyday success

John Lewis has also reported “phenomenal” early success for its newly launched Anyday value range. Launched in April, the range has 2,400 products spanning homeware, tech, baby care and baby clothing, with items prices on average 20% lower than the retailer’s other own label collections.

The launch was John Lewis’s most successful own brand launch ever for a spring season, the business said, having reached sales of £56m in the half and 750,000 customers, 25% of which were new to the retailer.John Lewis highlights price in first push for own brand value range

Pippa Wicks, executive director of John Lewis, said: “What’s lovely to see is in people’s baskets you see a mixture of Anyday products… and some of our premium brands. So we are capturing more of the wallet of our customers, which we’re really pleased about.”

John Lewis has an expansion of the brand planned for the autumn/winter season, which is to include men’s, women’s and children’s fashion.

Sales growth

Other plans the John Lewis Partnership has to drive further growth this year include launching 10 new Christmas emporiums (one-stop Christmas shops offering inspirational experiences) and new vegan and vegetarian own-brands in Waitrose.

John Lewis saw like-for-like sales over the first half grow by 13% compared to the same period last year, when businesses were struggling to adapt to Covid-19. This also represents an 11% increase on the 2019/20 financial year. Almost 75% of sales were online, significantly up on pre-pandemic levels when online accounted for 40% of sales.

Waitrose similarly saw like-for-like sales growth, up 4% on last year and 10% on 2019/20. Online sales now stand at 17%, up from 11% a year ago but down from the 20% recorded in March this year.

However, in order to return to profitability, this half of the year has also seen John Lewis permanently shutter eight of its stores. The business is also consulting on the closure of an associated delivery hub, and has reduced the number of head office roles. The partnership announced plans to cut 1,500 head office jobs in November last year.

Earlier this summer, the Partnership also announced plans to cut 1,000 jobs in stores.