Highlights include:

• Total sales at the John Lewis Partnership were up 4.9% versus last year¹  to £1,913.0m
• John Lewis and Waitrose traded well, with both brands gaining market share²  
• Waitrose gross sales (excluding fuel) were £914.9m, up 4.8%¹ versus last year and up 2.8%¹ on a like-for-like basis   
• John Lewis gross sales were £998.1m, up 4.9%¹ versus last year and up 2.7%¹ on a like-for-like basis
• Profit before Partnership Bonus, tax and exceptionals for the year ending 28 January 2017 is expected to be up on last year with lower pension accounting charges offsetting trading pressures on profit
• Partnership strategy will be accelerated to prepare the business for the challenges ahead
• The Partnership Board will decide on the level of Bonus in March, but, given the challenging market outlook and the importance of investment for the future, the Board expects that bonus is likely to be significantly lower than last year

Sir Charlie Mayfield, Chairman of the John Lewis Partnership, commented:

'We traded strongly over Christmas with sales up nearly 5% and both Waitrose and John Lewis grew market share.  Sales were particularly strong in the areas that have been the focus for product innovation this year, such as our Waitrose 1 premium range and John Lewis own-brand fashion. Our multi-channel capability has again proved its worth with online accounting for 40% of total sales in John Lewis.  

Operational performance was good across both brands. That was thanks to the hard work and commitment of Partners across shops, distribution and head offices. As a result we sustained a strong sales performance right through to Christmas and enabled a great start post Christmas including Clearance.

However, although we expect to report profits up on last year, trading profit³ is under pressure. This reflects the greater changes taking place across the retail sector. We expect those to quicken, especially in the next 12 months as the effects of weaker Sterling feed through. We will now accelerate aspects of our strategy. This will involve a period of significant change, investment and innovation to ensure the Partnership's success.'   

Waitrose

• Gross sales (excluding fuel) up 4.8%  to £914.9m, with like-for-like sales up 2.8%
• Convenience sales up 13.1% and 4.8% on a like-for-like basis
• Online grocery sales up 0.8%

Sales were driven by demand for premium items with the Waitrose 1 'best in class' range seeing a 21.4% uplift.

Hospitality was another key area of growth with sales up 4.9% as customers took advantage of the growing casual dining and snacking opportunities in our shops, while little Waitrose convenience shops also saw strong like for like growth.

A successful promotional campaign, including one day only offers for Christmas staples, such as champagne and crackers, proved effective in building footfall in the pre-Christmas period.

Online grocery sales saw an uplift in both orders and average order value, while John Lewis Click and Collect sales which were picked up in Waitrose shops were up 18.5% on last year.

John Lewis

• Gross sales up 4.9% to £998.1m, with like-for-like sales up 2.7%
• Online sales up 11.8%, representing 40.0% of sales. Shop sales up 0.8%.
• Across product areas: Home up 2.7%, Fashion up 7.2% and EHT up 4.8%

John Lewis outperformed the market again this year, with the pattern of trade characterised by the three peaks of Black Friday, Christmas week, and Clearance.

The channel mix saw a continued shift to online. Shopping on mobile phones was the online channel of choice with sales up 80.9%, accounting for 37% of all traffic. Click & Collect sales were up 14.5%, accounting for 52% of online orders.  Shop sales were up, trading well pre-Christmas as last-minute shopping delivered a record week for branches.

Operationally, our supply chain performed particularly well; on the Saturday after Black Friday our Magna Park distribution centre processed 33% more units than the equivalent in 2015.

Outlook

We expect the full year Profit before Partnership Bonus, tax and exceptionals to be ahead of last year. However, that will be substantially as a result of lower pension accounting charges following the changes to our pension scheme from April 2016 and the effect of favourable market interest rates used to determine the pension accounting costs at the beginning of this year.  Trading profit is under pressure as a result of wider changes taking place in retail.

The most obvious of these changes is the channel shift from shops to online. The other major influence is pricing, where deflation continues in food and non-food, despite rising input costs as a result of weakness in the Sterling exchange rate. 

These factors are significant for the outlook where we expect both inflationary cost pressures and competition to intensify in the market as a whole. The rate of retail market sales growth may slow and the rate of profit growth that is achievable will be affected by margin pressure.

We have decided to comment on Bonus implications at this stage because the Partnership's strong Christmas trading, and the likelihood of higher reported profits, risk overshadowing the importance the Board is placing on the challenging market outlook, our determination to maintain a strong balance sheet and our commitment to accelerating our strategy. The precise level of the Bonus will be decided as usual in March, but, in view of these factors, it is likely to be significantly lower than last year.   

John Lewis Partnership plc will report its full year results ended 28 January 2017 on 9 March 2017.  

¹The six week period this year to 31 December 2016 includes an additional trading day in shops compared to last year’s six week period to 2 January 2016. Excluding the additional trading day like-for-like sales were broadly level in Waitrose and approximately 2% up in John Lewis 
²Kantar Grocery data for Waitrose / BRC for John Lewis 
³Trading profit is Profit before Partnership Bonus, tax and exceptionals and before pension costs