Heatwave and Olympics subdues John Lewis sales growth
The store posted a sales increase of 6.2 percent in the week to 28 July compared to two previous weeks of double digit growth
By cfoworld staff | CFO UK | Published 09:58, 03 August 12
John Lewis saw a dip in sales growth last week due to the mini heat wave and the start of the London Olympics, the employee-owned store said on Friday.
Britain's biggest department store group reported a sales increase of 6.2 percent year on year to £56.6 million in the week to 28 July at its department stores.
In the previous two weeks the retailer had posted double digit rises of 11.2 percent and 17.3 percent respectively.
Despite the slight dip in growth, managing director Andy Street was upbeat saying that an 86 percent week on week uplift in sales of London 2012 merchandise "augurs well for an exciting week ahead".
He said the retailer's first half sales growth of 12.9 percent was "hugely encouraging".
"We substantially outperformed a slow market. While we have added a number of new shops, growth from the established business has been strong."
Street highlighted a trailblazing website performance in the half, which delivered a 43.5 percent rise in sales and said the store went into the second half "with confidence provided by strong momentum".
Although inflation and unemployment are falling, the economy is in recession and many retailers are suffering as consumers grapple with meagre wage growth and government austerity measures and worry about a weak housing market and fallout from the euro zone debt crisis.
The retailer has also been outperforming the wider market because its generally more affluent customers have been less impacted by the economic downturn, while improvements to product and service and new modern stores have chimed with consumers.
John Lewis, which has a bias to the south east of England, has set the pace in the sector this summer as the deluge of rain has driven footfall from the high street to the covered shopping malls where its stores are often located. Wet and cold weather is also favourable for its key household goods business.
The store’s sales numbers are, however, flattered by the fact it has more shops than last year and by higher prices because of inflation. Also electrical items tend to have relatively low profit margins.
John Lewis also owns upmarket supermarket chain Waitrose. Here week to 28 July sales rose 13.6 percent to £113.7 million.
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