TIDM45GD
RNS Number : 3155K
Lewis(John) PLC
21 April 2020
John Lewis plc makes the following announcement for John Lewis
Partnership plc,
the ultimate holding company of John Lewis plc
9.15am Tuesday 21 April 2020
YOUR PARTNERS THROUGH IT ALL:
TRADING UPDATE AND 2020 ANNUAL REPORT AND ACCOUNTS
Dear Partner,
I wanted to thank you for your extraordinary commitment and
professionalism during the pandemic. Your support to each other, to
customers and to the community has been inspiring and humbling. The
Partnership has come together in a wonderful way, with thousands of
John Lewis Partners supporting Waitrose.
Today we are publishing our Annual Report and Accounts , which
sets out the Partnership's financial performance for last year. The
Partnership is to all intents and purposes a social enterprise. We
prioritise customers and Partners ahead of profit. We aim to make
sufficient profit to invest in customers and Partners, not the
maximum amount possible.
I wrote to you with the highlights of last year's financial
performance when I announced the bonus decision in March. With the
outbreak of COVID-19, I wanted to give you the latest picture on
our trading performance. I also wanted to say more about how we are
supporting customers, Partners, suppliers, and our communities at
this time of national emergency.
This is a time of great uncertainty and volatility and the full
year picture is impossible to predict. We are therefore looking at
a range of different possible outcomes and how these might affect
profits, sales and cash flow.
We are confident that the future of the business is strong. Our
short term trading has though been significantly affected,
principally because of the closure of all 50 John Lewis branches.
John Lewis online remains open - providing essential goods and
services to enable customers to live well at home - and online
sales are substantially up on last year. But it has not been enough
to offset the loss of shop trade. Demand at Waitrose has risen
sharply but operating costs have increased too, especially as we
have expanded online delivery.
Prioritising safety
The safety of our customers and Partners is our absolute
priority. In our shops we have put in place checkout screens;
raised the contactless payment limit to GBP45; introduced floor
markers to support social distancing. In our warehouses and
distribution we are operating social distancing and maintaining
high health and safety standards. We are working round the clock to
ensure Partners have all the personal protection equipment you
need.
Supporting Partners
Partners are daily making significant personal sacrifices. All
non-management Partners and first level managers will receive a one
off award of GBP200. Partners who have been furloughed largely as a
result of the closure of John Lewis shops, will receive full
contractual pay until the end of May.
Supporting the community and our suppliers
As a Partnership we have a particular responsibility to support
those in the greatest need. We have created a wellbeing area for
NHS staff at the Nightingale Hospital in London, and are looking to
do similar in Birmingham. With the British Medical Association we
are providing boxes containing essentials such as toiletries, snack
food, tea, coffee and socks for NHS workers. We have also given NHS
staff priority service in our Waitrose shops.
We are also supporting elderly and vulnerable customers, with
the first shopping hour of the day given over to them and one
quarter of our online slots reserved for them. I know many more
customers would like home delivery than we can cater for and this
has caused understandable frustration. We also have set up a GBP1m
fund to support vulnerable members of the local community,
including schools for the children of key workers.
These are difficult times for suppliers. We are sticking by our
commitment to pay our smaller food suppliers with a turnover below
GBP100,000 within seven days. And we are donating GBP200,000 from
the Waitrose charitable foundation to support overseas farmers.
Trading
The pandemic has significantly changed the trading patterns in
both brands. In Waitrose, we have seen strong sales growth up 8%
year-on-year since 26 January. Items in highest demand have been
cupboard essentials like rice, pasta, long life milk; home baking;
frozen foods and cleaning products. Sales have increased in both
our shops and online. Demand for home delivery has been especially
strong and we have increased our capacity by 50%, which puts us in
good stead ahead of the ending of the Ocado contract in
September.
In John Lewis, trading has been mixed. With stores closed, we
have seen a significant spike in our online sales which are up 84%
year-on-year since the middle of March. The highest demand has been
in areas linked to working and living at home like technology and
food preparation but also in looking after and entertaining our
children and keeping fit. However, these are some of our less
profitable lines. We are buying more Scrabble but fewer sofas.
Overall, John Lewis sales are down 17% year-on-year since the
middle of March, and down 7% year-on-year since 26 January.
Our worst case scenario for the full year assumes significant
sales decline between April and June, and weak sales thereafter.
Over the course of the full year, this worst case would result in a
sales decline of around 35% in John Lewis, around double the
current level, while at Waitrose it would result in a more modest
decline of less than 5%.
Cash and liquidity
We started the financial year with just over GBP900m cash and
investments in the bank and with access to a further GBP500m of
undrawn committed bank facilities. Six weeks into the crisis, we
are holding broadly the same level of cash and investments. But
with such unprecedented trading volatility we have a range of
actions that we are ready to take to secure the financial
sustainability of the Partnership.
The Government has introduced a 12-month business rates holiday
for England and Scotland. This will save the Partnership around
GBP135m this financial year. The Government has also deferred
payment of VAT until March 2021, which will help our short term
cash flow.
The Board has already taken a number of steps to preserve
liquidity. These include:
- Lowering our planned stock intake in line with our slower trading in John Lewis.
- Reducing operating costs, including cutting back on our marketing spend by close to GBP100m.
- Minimising capital and investment commitments: Our capital and
investment spend for 2020/21 will be over GBP200m less than
originally planned.
- Furloughing more than 14,000 Partners whose jobs are
temporarily no longer supported by the business.
- Negotiating with landlords regarding rent relief, including an
immediate switch to monthly from quarterly payments.
- Working with our banking partners to consider how extra
flexibility can be provided, should it be needed.
In addition, the Executive Team, Non Executive Directors of the
Partnership Board, the Independent Directors and I will be taking a
20% cut in pay from April, initially for three months.
With these actions and continued close attention, I am confident
that we have sufficient cash to operate successfully through a
broad range of potential scenarios.
Emerging stronger from the crisis
I announced in March that we will be undertaking a Strategic
Review of the Partnership, to strengthen our core retail business
and develop new services outside retail. The review will now be
accelerated and will 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.
The Partnership has been trading for nearly a century. It has
survived a world war and bombings, economic crashes and crises.
Thanks to you, we shall also come through COVID-19 too and emerge
stronger.
Sharon White
Partner & Chairman
-S-
For media enquiries:
Clayton Hirst clayton.hirst@johnlewis.co.uk or 07947 708167
Sarah Henderson sarah.henderson@johnlewis.co.uk or 07764
676036
For debt investors:
Lynn Lochhead investor.relations@johnlewis.co.uk or 07834
770684
Notes to editors:
About the John Lewis Partnership
The John Lewis Partnership owns and operates two of Britain's
best-loved retail brands - John Lewis & Partners and Waitrose
& Partners. Started as a radical idea nearly a century ago, the
Partnership is the largest employee-owned business in the UK and
amongst the largest in the world, with over 80,000 employees who
are all Partners in the business. For all intents and purposes, the
Partnership is a social enterprise; the profits made are reinvested
into the business - for customers and Partners.
John Lewis & Partners operates 50 shops across the UK (37
department stores, 12 John Lewis at home and shops at St Pancras
International and Heathrow Terminal 2) as well as johnlewis.com .
Waitrose & Partners has 338 shops in England, Scotland, Wales
and the Channel Islands, including 61 convenience branches, and
another 27 shops at Welcome Break locations. Waitrose &
Partners exports products to more than 50 countries worldwide and
has nine shops which operate under licence in the Middle East. The
retailer's omnichannel business includes the online grocery
service, Waitrose.com , as well as specialist online shops
including waitrosecellar.com for wine and waitroseflorist.com for
plants and flowers. Our food business is bigger than our non-food
business and our John Lewis shop sales represent less than a
quarter of the Partnership's total revenue.
This information is provided by RNS, the news service of the
London Stock Exchange. RNS is approved by the Financial Conduct
Authority to act as a Primary Information Provider in the United
Kingdom. Terms and conditions relating to the use and distribution
of this information may apply. For further information, please
contact rns@lseg.com or visit www.rns.com.
END
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