John Lewis ended its half-year (to 30 July) “well pleased” with a 2.6% increase against a strong first half last year.  It believes it has outperformed competitors in all three main categories – electrical, home and fashion – and “most definitely online”.      

Sales of ‘electricals and home technology’ had been difficult in late May and early June (down by about 4%), but once the boost last year from the World Cup was out of the way, the sector moved back into positive territory (up by over 9% in the seven weeks to the end of July).  It must be noted that three new ‘at home’ stores have opened in the past year (at Croydon, Swindon and Tunbridge Wells) so the figures are not strictly comparable.  Even so, in difficult times these are healthy increases that most rivals would have been pleased to emulate.

The strength of its internet business (up by 27% in the six months) is highlighted by the fact that only three stores beat last year’s figures – Oxford Street and Peter Jones in London, and Cambridge.  Reading and Cribbs Causeway (both down around 9%) were at the bottom of the league table, and interestingly, Poole ‘at home’ which opened in October 2009 recorded a 5.2% year-on-year decline.

Mid-size and flexible

Though its online business goes from strength to strength, John Lewis is committed to continuing investment in bricks and mortar.  Three more stores open this year – Stratford City this month, and then 'at home' in Chester and Tamworth. 

In November last year, it announced that Exeter city centre would house a new ‘at home’.  Now, after working with developers Land Securities to remodel the scheme, the opening will be delayed until late 2012, but floor space will nearly double to 70,000 sq ft.  It will be the first of a number of mid-size stores that will add fashion to furniture, furnishings, electrical and home technology, thus significantly increasing the customer appeal and footfall. 

John Lewis has identified at least ten locations in the UK that could take this more flexible format and thus introduce department stores into larger towns where it has long sought a presence.  In addition it aspires to have ten ‘at home’ stores trading by the end of 2012.  Newbury and Ashford are already committed, and other announcements are awaited.  Some 40% of John Lewis’s target market is currently beyond a 40-minute drive; they want to reduce that to 20%.  A total of sixty shops, comprising large department stores, ‘at home’ and now mid-sized outlets would achieve that goal, and it plans to double turnover in the next ten years.     

Strugglers

Despite this new mid-size opportunity, John Lewis remains committed to the smaller ‘at home’ format: “Home is still on the agenda.  It’s a big opportunity.  Many competitors are struggling”. 

Indeed they are.  Best Buy UK’s future remains under review, which is no surprise given the £62 million loss in the year to March.  Joint owners Carphone Warehouse at its recent first-quarter performance update simply confirmed it will reveal its plans for the division “in due course”.  When asked if he is still confident that Best Buy can become a significant force in the UK, chairman and founder Charles Dunstone would only say:  “That’s still the aim.”

Comet’s future is also unclear, with Kesa raising the ‘for sale’ sign at the end of June.  After some misleading press stories, leading shareholder Knight Vinke (with a 19.3% stake) made it clear it had no objections to a sale, assuming an acceptable price can be achieved and the process is concluded within three months.  A number of restructuring specialists and others wanting to run the business as a going concern initially expressed an interest.  But as the bidding process progresses, it remains to be seen whether that interest is sufficiently robust or will Kesa have to offer a dowry to conclude a deal, especially in view of the reported £49 million pension deficit?  

And finally, whilst business in the UK may have been dire for many, spare a thought for traders in the Republic of Ireland.  Official figures just released show retail sales have continued to slump, with like-for-likes falling 6% in the second quarter, double the first quarter decline.  June 2011 marked the fortieth consecutive month of declining sales.  In the second quarter, electricals was the worst performing sector with sales falling by 9.5%.