Chairman’s statement

continued

John Lewis

John Lewis continued to outperform the general market, consistently beating competitors. This achievement is a result of customers appreciating an innovative product offer, quality merchandise at every price point, ease of shopping through the multi-channel operation and the excellent customer service for which we are renowned.

Gross sales were up 2.5% at £1.42bn and like-for-like sales were up 1.0%. Operating profit fell by 54.5% to £15.8m.

Profits were impacted by our commitment to ‘Never Knowingly Undersold’ as well as a highly competitive trading environment. John Lewis continues our strategy to grow the business efficiently and invest for the long term.

Despite challenging trading conditions John Lewis won share in each of our three markets, and notably in Electricals. Home has inevitably been adversely affected by the housing market but is continuing to perform well. Home sales grew by 0.6%, Fashion by a very creditable 4.2% and Electricals and Home Technology (EHT), trading in a very competitive marketplace, grew sales by 3.8%.

Our very successful multichannel and online operations have been at the heart of John Lewis’ performance. All three John Lewis markets were instrumental in driving sales in this area, with johnlewis.com outperforming its market and seeing 27.2% growth. This has been achieved through increasing the number of products and brands sold online, investing in distribution and developing the ‘Click and Collect’ option which allows customers the choice of picking up their online purchases from all 32 John Lewis and 24 Waitrose shops. As this facility has proved to be so popular, from next month the number of collection outlets will more than double to 116, including collection points in 84 Waitrose branches, with more being planned.

Johnlewis.com already accounts for 19% of total John Lewis sales. There is considerable opportunity for growth in the online operation, and our expectation is that johnlewis.com will be achieving sales of £1bn by 2014. This will be bolstered by the new online international operation which began delivering abroad in June and is now live in 33 countries.

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