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John Lewis tweaks ‘At Home’

Department store group John Lewis has admitted its At Home stores are performing below expectations in a tough market and will tweak the format to broaden the offer.

John Lewis managing director Andy Street said: “It’s performed a little below what we expected, but that’s in line with a market that is a little bit below what we expected.”

However, Street insisted John Lewis is “confident” in the format, and is opening two more next month in Chester and Tamworth, taking its store count to six, and a further three next year.

Street said the furniture market is “extremely” tough and that John Lewis at Home will widen its offer to include lower priced items such as pictures, mirrors, and rugs as well as beauty gifts in response to customer demand.

John Lewis’s operating profit slumped 54.5% to £15.8m in the six months to July 30, as the retailer invested in the business and fought a highly-competitive retail environment.

Street said the “disappointing” profits were affected by the record investment it made in its Never Knowingly Undersold price promise. It spent £9.3m more than it did in the same period last year. Most of the investment was made in its technology category, said Street.

Street said that despite the impact on profits, John Lewis has “absolutely no plans to step away” from the Never Knowingly Undersold policy. It expanded the price promise to online in September 2010, and it expected the move to be felt in its technology category.

Sales grew at the department store, with like-for-likes edging up 1%, and total sales growing 2.5% to £1.42bn. In the first six weeks of the second half, like- for-likes improved, up 1.9%. In the six months, online sales rocketed 27%.John Lewis, which opened its latest store in Westfield Stratford City on Tuesday, said it made market share gains in all categories. Fashion showed strongest growth, with sales rising 4.2%. Home was up 0.6%, and electricals and technology up 3.2%.

Street said the fashion market was “easier” than the other markets in which it operates, and he added that John Lewis was benefiting from the “first class job building the brand portfolio and a good job on own brand”.

Street said that consumer sentiment is “fragile” but “not disastrous”. “It’s not like 2008,” he added.

He said: “It will be difficult for the rest of the year but we’re confident this Christmas we’ll outperform the market.” He expects sales to grow by between 4% and 5% in the second half.

Source : Nicola Harrison - Retail Week

16 September 2011
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