Retail & Leisure News - 15 March, 2018
John Lewis has announced slowing LFL sales growth, and declining profit, in a signal to the market of how challenging non-food retailing has become. Despite LFL growth in the department store business of 0.4%, and total revenue growth of 1.8%, the Partnership’s profits fell by 21.9% (before exceptionals) in the year to 27 January. Even for retailers as strong as John Lewis, which continues to deliver some top-line growth to maintain market share, this underlines the difficulty in maintaining profitability in current market conditions.
The headwinds facing the Partnership are common to the broader retail market. Waitrose, despite LFL growth of 0.9%, is susceptible to the ongoing squeezing of consumer budgets and shoppers' ‘down-trading’, in addition to increased costs as a result of the fall in sterling. At John Lewis, the strong performance in clothing and beauty was counteracted by weak sales in the home department. Again, this is broadly in line with market trends, as the homewares sector continues to suffer from slowing big-ticket spending. The bigger picture remains positive for the Partnership, however; this is more a case of ‘short-term pain for long-term gain.’ Profits were down principally due to the amount of investment that the group is making in innovation, and in adapting its business model to align with future retail trends.
In positive news for the F&B and leisure market, Eataly has announced that it will open its first UK location at British Land’s Broadgate development in 2020. This follows the announcement that the former BHS department store on Oxford Street will become the UK’s largest food hall when it opens, as a Try Market Halls venture, later in 2018. Clearly, food halls are one of the ‘hot’ sectors in the UK retail market at the moment, with the number of sites set to double in the UK (and the US) in the next couple of years.
Read more about ‘Why food halls are becoming a city center must-have’. And discover which other consumer-driven trends are shaping the foodservice landscape of tomorrow, in JLL’s latest Food trends report.
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Director, Head of Retail Research (UK & EMEA)
+44 (0)20 3147 1155
Director, Head of UK Retail & Leisure
+44 (0)20 7318 7838