Can John Lewis really rely on Christmas trading to report a profit this year?
The first half loss before tax was £99mln for the UK's bellwether retailer compared to £29mln last year.
John Lewis's first half has been the seasonally weaker of the two in the last three out of four years, but the circumstances this time are anything but normal.
Inflation, the cost-of-living crisis and the unwinding of Covid shopping patterns mean this year the “heavily skewed towards Christmas” pattern might be a problem.
Challenges
According to its half-year results, the two main issues that impacted the firm were inflation and post-pandemic customer trends.
John Lewis said that for its two brands, Waitrose and John Lewis, the number of customers coming in the door had grown by 6% and 4% respectively.
However, inflation increased its own costs and impacted consumer spending, with shoppers spending less.
Post-pandemic consumer trends also point to a shift in where customers spend their discretionary income.
During the lockdown, with nowhere to go, consumers would spend on big-ticket household items, according to John Lewis.
A re-opening of travel and leisure, however, has seen consumers spend on restaurants and holidays instead, to its detriment.
What can it do?
To ensure it is not overly reliant on the Christmas period in the future, the group is looking to diversify into the housing and rental market.
It said it will construct its first build-to-rent homes over Waitrose shops in Bromley and West Ealing in Greater London, as well as on the site of a vacant John Lewis warehouse in Reading.
Locals in Bromley and West Ealing will be invited to public consultations to discuss the plans, which include improvement to the Waitrose stores as part of the redevelopment process.
Based on feedback received, the group said it intends to submit planning applications for Bromley and West Ealing in 2023.
The three chosen locations are part of John Lewis plans to build 10,000 homes in the next ten years, half from its own property portfolio.
Becoming a landlord is part of management's long-term plan for 40% of profits to come from outside of retail by 2030.