John Lewis warns of 35% sales slump in worst case pandemic scenario; Waitrose sales up

John Lewis Partnership warned on Tuesday that sales at its department stores division could crash by 35% this year in a worst case scenario for the coronavirus crisis.

The employee-owned group, which also owns the Waitrose supermarket chain, also said it would accelerate a strategic review that new chairman Sharon White launched in March.

The partnership said sales at its department store business had fallen 17 percent year-on-year since the middle of March and were down 7 percent since 26 January – the start of its 2020-21 financial year.

Waitrose sales are up 8 percent since 26 January, benefiting from strong demand for food both before and during the lockdown. It said demand for home delivery has been especially strong and it has increased capacity by 50 percent, raising operating costs.

Under its worst case scenario Waitrose’s sales would fall less than 5 percent over the full year.

Its 50 John Lewis stores have been closed since March 23, a day before Britain went into lockdown to try to stop the spread of the virus, but its online operation has continued to trade, with its sales up 84 percent.

To preserve cash the group has also lowered planned stock intake, reduced marketing spend by £100 million, cut capital and investment spend by £200 million and furloughed 14,000 employees, which it calls partners, under a government’s scheme.

The group is also negotiating with landlords regarding rent relief, including a switch to monthly from quarterly payments.

The partnership has £900 million of cash and investments in the bank and access to a further £500 million of undrawn committed facilities to help get it through the crisis.

White said the British government’s 12-month business rates holiday would save the group around £135 million.

In early March, before the severity of the outbreak was known, White warned it could take up to five years to revive the group. Her review will now be substantially complete by the summer.

“It will seek to take account of changes in consumer behaviour to come out of the pandemic, such as a more pronounced shift to online and a desire to shop in more sustainable ways,” she said.