John Lewis Sales Gain Leaves U.K. Competitors TrailingPaul Jarvis
John Lewis, the U.K.’s largest department-store chain, and competitor House of Fraser reported stronger Christmas sales, distancing themselves from the difficulties of rival Debenhams Plc.
John Lewis’s revenue rose 7.2 percent to 734 million pounds ($1.2 billion) in the five weeks ended Dec. 28, the London-based retailer said today in a statement. House of Fraser’s like-for-like sales rose 4.3 percent in the nine weeks through Dec. 28. Both retailers cited surging online orders.
The gains contrast with a difficult Christmas for Debenhams, which said today that Chief Financial Officer Simon Herrick will leave the company. Herrick’s departure comes two days after the retailer forecast a profit slide because of stagnant sales and increased discounting to clear inventory.
“We are confident that the strong updates from House of Fraser and John Lewis will put them both firmly in the winners column this year,” Andrew Wade, an analyst at Numis Securities in London, said in a note. “Debenhams’ problems are more company-specific than market-led.”
While Britons made more shopping trips in December than in the same month a year earlier, not all retailers have been winners. Some, including Debenhams, offered discounts of as much as 50 percent before Christmas as shoppers delayed purchases to wait for bargains, taking a toll on profitability.
Sales at John Lewis stores gained 1.2 percent in the five-week period. The employee-owned chain, named the U.K.’s best retailer in three award ceremonies last year, said online orders rose 23 percent and accounted for almost a third of revenue.
Sales growth was “broadly based and we expect to have outperformed the market,” Managing Director Andy Street said in the statement. “It bodes well for trade in 2014.”
At House of Fraser, reportedly an acquisition target for Galeries Lafayette, sales growth accelerated as the holiday approached. Like-for-like revenue was up 7.3 percent in the three weeks ended Dec. 28, while online sales gained 58 percent.
“The peak Christmas trading came late, however it was the best we have ever recorded,” John King, chief executive officer of the closely-held chain, said in a statement.
Galeries Lafayette is in advanced talks to buy House of Fraser, the Financial Times reported last month.
Both John Lewis and House of Fraser reported a late spending surge by Britons, in contrast to Debenhams, which said an anticipated rush of Christmas business failed to materialize, causing it to offer discounts and leaving a backlog of inventory to clear in the next two months.
Click & Collect
John Lewis shops were “packed in the last-minute rush” on Dec. 23, the company said. Electrical items and home technology was the strongest-growing product category, boosting sales by 11 percent. Fashion, including the beauty department, was up 8.5 percent, while sales of products for the home rose 2 percent.
Among the strongest areas was the click & collect business, where customers order online and pick up the item from their local store. Orders placed through the channel were up 62 percent on the previous year, John Lewis said.
U.K. retail followers will now turn their attention to tomorrow’s holiday sales update from Next Plc and a Jan. 9 statement due from Marks & Spencer Group Plc.