John Lewis Christmas week sales hit by Black Friday

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Sales at John Lewis fell back 1.4% in Christmas week as purchases of electrical goods were pulled forward by the Black Friday promotional weekend.

While fashion and home furnishing sales rose strongly in the week to 27 December, sales of electrical goods fell back 14.7% compared with the same week the previous year, with the overall total falling 1.4%. Sales were hit after shoppers splashed out during the Black Friday promotional weekend in late November, which proved the peak week for John Lewis in 2014. The figures were also depressed because Christmas week in 2014 included one fewer day of clearance sales than a year ago.

“The fall of the calendar is such that we would expect to see some of this clearance demand fall into next week’s numbers,” said Mark Lewis, online director at John Lewis.

The weak performance came despite a 19% increase in sales on Christmas Day itself and a 30% rise in click-and-collect online orders being picked up from stores by shoppers. John Lewis said Christmas Day sales had peaked at 9pm “as customers shopped from their mobile devices while also watching Downton Abbey in the background.”

The department store’s performance will raise fears that profit margins for electricals retailers will have taken a hit over Christmas as shoppers spent their budget on early Black Friday deals rather than full-price gifts.

Neil Saunders, at retail consultancy Conlumino, said: “The distortion of Black Friday is clearly not as helpful as retailers would have wished. In essence, it has been an exercise of selling the same volumes but doing so at a discounted margin. We expect there to be a negative impact on profitability at a number of players as further Christmas results filter through.”

John Lewis’s sister chain Waitrose enjoyed a strong end to the year as sales of sparkling wines, whisky and turkey crowns helped the upmarket grocer outperform its bigger rivals, with sales up 6.5% in the two weeks to 27 December.

Mark Price, managing director of Waitrose, said the chain had enjoyed better than anticipated sales in the run up to New Year’s Eve after a steady Christmas fortnight. “We had some good strong figures and like-for-like growth,” he said.

Price added that a problem with the retailer’s online systems which delayed orders on the Sunday before Christmas by a few hours was a “minor blip” and that shoppers’ hunger for fine wines, pre-prepared and luxury foods had all helped lift sales.

Sales of sparkling wine rose 20% in the two weeks to 27 December compared with last year while sales of frozen lobster were up 51% and “top-tier” luxury cheeses were up 35.7%.

“As we’ve seen over the last few years people are moving towards added-value,” said Price, adding that Waitrose was likely to have outperformed its bigger rivals. The grocery market is struggling amid price deflation of between 1% and 2%. “It’s hard to see that growth would be strong,” he said. “Even if people are selling the same volumes their sales will be down.”

The UK’s three stock-market listed grocers – Tesco, Morrisons and Sainsbury’s – are all scheduled to release their trading figures next week in what is thought to have been a tough festive season for the major supermarkets. The big four, which also includes Asda, are being squeezed as shoppers increasingly turn to upmarket chains Waitrose and Marks & Spencer as well as discounters such as Aldi and Lidl.

Tesco boss Dave Lewis will also be updating the market on his plans to fight back against falling sales and profits, and it is hoped he will confirm an improvement in trading which has already been indicated by market share data from analysts at Kantar Worldpanel.

Powered by article was written by Sarah Butler, for The Guardian on Friday 2nd January 2015 11.21 Europe/London © Guardian News and Media Limited 2010


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