Britain’s biggest store chains are pinning their hopes on a bumper Christmas despite fears that strict measures to stop a second wave of coronavirus could devastate business.
After lurching to a £635million half-year loss – and revealing there would be no staff bonus for the first time since 1953 – John Lewis Partnership chairman Dame Sharon White said the festive season would be ‘particularly important’ for its department stores and Waitrose supermarkets this year.
And Next chief executive Lord Wolfson warned the recently enforced ‘rule of six’ is ‘likely to depress demand for gifts and clothing associated with traditional family get-togethers’ if it remains in place in December.
John Lewis Partnership boss Dame Sharon White, right, said Christmas would be ‘particularly important’ while Next chief exec Lord Wolfson, left, fears ‘rule of six’ may depress demand
Retailers, including Marks & Spencer, are understood to have become increasingly nervous that the restrictions on social gatherings will curb festive celebration, denting sales of food, drink and party dresses.
In a letter to staff confirming they would not receive a bonus, White acknowledged the outlook is ‘uncertain’ but said households are particularly ‘excited’ about Christmas this year.
John Lewis opened its Christmas shop section on its website on August 24 – ten days earlier than it did last year – following a surge in online enquiries about festive products including Christmas trees, baubles, and mince pies.
White insisted she is not being ‘naive’ about the risk posed by further lockdowns, curfews and the Government’s new ‘rule of six’ limit on social gatherings.
But she said: ‘We can see in the trading right now how excited people are. Most families are going to want a bit of a lift this Christmas however we’re going to celebrate it.
‘We’ve got some fantastic plans in both brands really to deliver the best Christmas for families after what I think for everybody has been a pretty torrid, pretty difficult year.’
Pippa Wicks, John Lewis executive director, said: ‘We are expecting the same demand as last year, if not better than last year.’
Waitrose thrives post-Ocado
Waitrose has reported a surge in online orders since it severed ties with Ocado at the start of the month.
The upmarket grocer is battling to boost its online business, after Ocado joined forces with Marks & Spencer to deliver shopping to Middle England households.
Yesterday it claimed Waitrose.com is doing a roaring trade – delivering around 170,000 orders a week, up from around 60,000 before the pandemic.
The supermarket also said it had seen a ‘strong pick-up in demand’ since the end of its relationship with Ocado on September 1 , with Waitrose.com orders up 9 per cent in the first week.
Local shopping lift for Co-op
The Co-op has seized its biggest share of the grocery market for almost two decades as the pandemic drives ‘exceptional’ demand.
The business said families were eating out less frequently and shopping closer to home, delivering a boost to its food sales.
It helped the grocer grow its market share to a peak of 7.4 per cent in July, according to research by Kantar, up from 6 per cent before the Covid-19 lockdown. The boom in demand also lifted Co-op’s revenues by 7.6 per cent to £5.8billion in the 26 weeks to July 4, with profits surging 35 per cent to £27million.
On the back of the success, the group is handing staff a pay rise.
Boris Johnson has revealed plans to loosen the rule of six so that extended families can spend Christmas together.
But the Prime Minister has insisted this will only be possible if people abide by the social distancing rules now, to help stop the rise in infections.
In an interview with The Sun he said this may involve imposing a curfew on business such as pubs to flatten the curve.
A dent in Christmas sales is the last thing that struggling retailers – including John Lewis – need. John Lewis, famous for its Christmas adverts each year, revealed the devastating impact of the coronavirus crisis on the group, which includes Waitrose.
It was forced to write down the value of John Lewis stores by £470million after their closure during the lockdown accelerated the switch to online shopping.
This, allied with £200million in lost sales from the lockdown and a £50million Covid bill, including for PPE equipment for staff, dragged the John Lewis Partnership to a £635million loss in the six months to the end of July.
Even without these exceptional items, it fell to a pre-tax loss of £55million. Meanwhile, Next increased its full-year earnings outlook for the second time in as many months after a surge in summer sales.
Sales were boosted by fewer people taking holidays abroad in August and cool weather at the end of the month – compared to a heatwave last year – which buoyed demand for its warmer autumn ranges.
While full-price sales plunged by a third in its first half, Next also said trading since the lockdown had been ‘resilient’ due to strong online sales.
The fashion chain expects to turn a full year profit of £300million – down heavily on the £729million the previous year but up sharply from the £195million it had been predicting in July.
But it said it fell to a loss of £16.5million in the six months to the end of July – down from a profit of £327.4million last year. And it warned the end of the furlough scheme, a rise in the infection rate over the winter and tighter social distancing rules could hit sales.
The retailer also revealed it expects to renew leases on 60 stores. Based on negotiations with landlords so far it expects it to slash rents by half on average – saving it just under £10million a year.