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Christmas cheer might not be all over yet for Waitrose

Outlook

James Moore
Thursday 07 January 2016 01:58 GMT
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How bad was Waitrose’s Christmas? That depends on how you look at it. The grocer, which has long defied gravity, reported falling headline sales, and at the fastest rate for several years. That means lower profits and it doesn’t get any easier from here on out. Wages and business rates are set to rise, putting pressure on costs, and making it still harder for the business to make money.

But it isn’t quite as bad as it looked. The chain enjoyed a last-minute rush, as shoppers left it late to buy their food, and sales when measured by the number of products shifted increased, which should serve the chain well if it can keep up the pace when prices start to rise again (as they will).

Waitrose outlets also serve as handy click and collect hubs for John Lewis, where business is booming, particularly online.

Retail habits are changing, and quickly, but the John Lewis Partnership as a whole is adapting rather well. It is perhaps with a eye on its success that motivated Sainsbury’s to take a pop at Argos. John Lewis does rather prove that a marriage between a general retailer and a grocer can be a happy one, even in a cold retail climate.

Unfortunately for Sainsbury’s shareholders, suffering a second straight day of falls, the John Lewis Partnership is greatly assisted by its unique model, market positioning and ownership structure.

It has something that can’t easily be replicated, by Sainsbury’s or anyone else.

Still, we’re only a couple of days into the post-Christmas retail results rush, and the surprises keep on coming. Whatever next? M&S managing to pull a rabbit out of its hat by stemming the decline in womenswear sales? Perhaps not. M&S should see normal service resumed.

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