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John Lewis

John Lewis fashion outshines rivals this Christmas, supporting gross sales of just shy of £1bn

Fashion at John Lewis has had a tremendous Christmas, with sales up 7.2% – far exceeding its competitors, even those that have reported robust performances such as Debenhams, M&S and House of Fraser. Own brand collections continued to strengthen throughout 2016, with the inclusion of Modern Rarity filling a gap in its private label brand portfolio by appealing to a stylish, design-led shopper and taking Cos on as a direct rival. John Lewis should consider taking this brand into menswear, given the outperformance of menswear in 2017 versus other clothing sectors, and the current gaps in the market for brands targeting the 30-45 year old male shopper.

Its Electricals Home & Technology division was up against the strongest comparative, rising 4.8% against a 9.6% rise last Christmas. The department faced huge discounting pressure from rivals Amazon, Argos and Dixons Carphone, particularly over Black Friday when promotions were offered over a week ahead of the main event. However, John Lewis’ strategy of selling the latest models across technology categories will have limited its exposure to the breadth of discounts available elsewhere. As one of the leading players in selling affordable smart home technology, we expect John Lewis to see a greater up-take in demand in 2017 following its significant investment in the department during 2016 and increasing consumer awareness. Home reported the slowest sales growth at 2.7% against a 5.1% rise last year, though this is outperforming both the home and furniture markets and is resilient given the fall in housing transactions.

Paula Nickolds takes over the reins this month from Andy Street, marking the start of a new era for the department store. Nickolds’ understanding of the business will ensure Street’s legacy and strategy will be carried forward, but her new appointment begins at the start of what will be a challenging and unpredictable three year (at least) period, so new initiatives will be important to stimulate demand.

Source: Verdict Viewpoint, 12th January 2017

January 2017

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