Comparing performance of two retail companies

This report is in order to indicate the different performance of the two companies in the same business area. The analysis will be divided into both financial and non-financial parts. In the financial aspect, those two companies will be observed from horizontal, vertical, trend and ratio four parts within two years. And in non-financial part, appropriate methods will be used to explore the operations for both two companies. The SWOT analysis will illustrate the strength and weakness of those companies, which could clearly identify what factors makes the company so competitive in the industry area and where is the most potential part of the company could be improved.

This paper will compare the two companies in the retail industry, which are Marks & Spencer and John Lewis. Those two companies were chosen because both of them occupy a competitive market share as a retailer in U.K. And they even ranked the first two places as the most-trusted brand in U.K (McCormick,A 2010). The similarity performance in the retailer market of those two companies must lead to their financial and non-financial objectives are comparable with each other.

Section1: Company Details

1’Marks & Spencer

Marks and Spencer Group plc?

Waterside House?35

North Wharf Road?

London?

W2 1NW

2’John Lewis

John Lewis plc

171 Victoria Street

London

SW1E 5NN

Both two companies are known as the popular retailer in U.K.

Brief History

Marks and Spencer

Marks & Spencer was established in 125 years ago. Firstly the new stores were called ‘ Penny Bazaars’, and the idea of it was in order to inspire customers to buy products without any hesitation. By 1900, Makes & Spencer had expanded to include 36 penny Bazaars and 12 High Street shops. In order to satisfy their customers, in the period of 1920 to 1940 Marks & Spencer started to sell more of daily essentials products, including underwear, which made them successfully survived above other competitors. In 1960 to 1970, Marks & Spencer invented the ‘ cold-chain’ process to selling fresh dairy products and meats, which enclose the connection between the suppliers and the retailer and also shaped their supply chain well. In 2010, Marks & Spencer is becoming one of the UK’s leading retailers with Quality, Value, Service, Innovation and Trust. Those are the core values of Marks & Spencer, which are as important for the company as it was founded over 125 years ago. And there are over 76,000 people works for Marks & Spencer both in the UK and they also expend their business to overseas with 40 areas outside the U.K.

John Lewis

The first shop of John Lewis was begun at London’s Oxford Street in 1864. With the slogan of ‘Never Knowingly Undersold’, John Lewis attracted lots of customer to come cause their impressive brand image, which means the price of their selling products will always be the lowest around the neighborhood. And this lasts for over 75 years. As John Lewis set up the Partnership, which are the employees participate as a partner of the company. The co-own business pattern encourage the employees serving customers with high quality goods and services as suppliers. Till 2010, John Lewis building the largest department store retailer in the UK, with 32 John Lewis shops (28 department stores and four John Lewis at home) and developing its online shop as well. All 70,000 permanent staff is the partners of their business who own 32 John Lewis shops across the UK and 241 Waitrose supermarkets. In July 2009, John Lewis listed first in the UK Consumer Satisfaction Index from the Institute of Customer Service (ICS). And in February 2010, due to the good performance, John Lewis became the Official Department Store Provider to London 2012.

Section2: Business Activities

Company Product Tree: Marks & Spencer

? Clothes

-Women’s

-Men’s

-Kids

? Electronic

? Food store

-Fruit

-Dairy

-Cake

-Vegetable

-Wine o Women

-By category

-By brand

-By age

o Men

o Kids

o Shoes

o Home & Furniture

o Technology

o Flowers & Gifts

o Food & Wine

o M & S TV

o Offers

-Christmas

Marks & Spencer provide stylish, high quality, great value clothing and home products, as well as outstanding quality foods, the source of M&S is comes from around 2,000 suppliers around the worldwide. As the number one provider of womenswear and lingerie in the UK, M&S also rapidly growing the market share in menswear, kidswear and home products. Overall, the clothing and homeware sales account for 49% of M&S business. The other 51% of their business is in food, where they selling everything from fresh produce and groceries, to partly-prepared meals and ready meals. M&S employ over 75,000 people in the UK and abroad, and have over 600 UK stores, plus an expanding international business.

Company Product Tree: John Lewis

? Clothes

-Women’s Fashion

-Men’s Fashion

-Children’s Fashion

? Beauty

? Jewellery accessories

? Electronic appliances

-Large

-Small

? Homes

-Furniture

-Garden

-Kitchen

? Restaurant

? Car park

? Customer Service

? Seasonal Shop o Women

-Highlights

-Clothing

-Accessories

o Men

o Beauty

-Makeup & Fragrant

-Body skin & Hair care

o Electricals

-Sound & Vision

-Computing

-Household applicants

-Small applicants

o Home & Garden

o Baby& Child

o Toys

o Soprts&Leisure

o Gifts

o Special offers ? Food

-Chicken

-Dessert

-Vegetarian

-Cake

-Starters

-Fish

-Salmon

? Drink

-Wine

-Beer

-Spirit

? Entertaining

John Lewis focusing their selling products on home, electrical and home technology and with additional features including a caf’ and collection. In the department store they offer the best fashions, furnishings and household goods at competitive prices with excellent service and free delivery service. And this part occupies the biggest share of John Lewis’ business. At the same time, Waitrose exist as a food shop as part of the business of John Lewis Partnership by offering freshness, quality and safety food. Either of the department store or Waitrose offering online shop services. John Lewis department store do not have any business overseas till now, and the first shop outside the U.K is planning opened in Dublin in 2011, at the same time the future plans of John Lewis will be open more home shops and improving their online services.

Section3: Financial Analysis

Financial analysis is about to select the data, evaluate them, and interpret the meaning of the data, along with relevant information, to help the company to distinguish the risk and return that they would have before doing an investment. It draws the financial data from many sources, such as cost of sales, taxation and assets. And financial analysis takes this information to make it clear of what these statistics says about the company’s business performance in the past and the circumstance they are facing now and more importantly- what is tell people about the future of the company will be and situation could be (Peterson, P and Fabozzi, F 2006).

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The financial analysis of this report will determine the financial performance of Marks & Spencer and John Lewis in 2008 and 2009. Due to the changes during these two years, the business trend of both companies will be illustrated. The source of the data comes from FAME and the annual report of Marks & Spencer and John Lewis.

Horizontal

The data below is about the incoming statement of Marks & Spencer and John Lewis in the year 2008 and 2009. And the noticeable changes will be clarify by analysis and compare for both companies.

Income Statement

‘ M&S John Lewis

2008 2009 % 2008 2009 %

Turnover 9,022,000 9,062,100 4.4 6,052,200 6,267,200 3.4

Cost of sales -5,535,200 -5,690,200 -2.7 -4,007,600 -4,195,400 -4.5

Gross Profit 3,486,800 3,371,900 -3.4 2,044,600 2,071,800 1.3

Administration Expenses -2,447,200 -2,644,500 -7.5 -1,675,100 -1,919,600 -13.3

Other operating income 49,700 41,500 -2

Operating Profit 1,211,300 870,700 -3.9 369,500 152,200 -1.4

Other income and interest received 64,400 50,000 -2.9 50,300 184,500 72.7

Profit before interests 1,275,700 920,700 -3.9 238,700 336,700 29.1

Interest paid -146,600 -214,500 -3.2 -40,000 -55,100 -27.4

Profit before tax 1,129,100 706,200 -6 198,700 281,600 29.4

Tax -308,100 -199,400 -5.5 -59,400 -48,100 -23.5

Net profit 821,000 506,800 -6.2 139,300 233,500 40.3

Turnover represents for sales or revenue of the company. It could be the totally quantity of goods or services that the company sold and also could be the amount of money paid by customers (Peterson, P and Fabozzi, F 2006). Both of the companies have been through a slight increase of sales and revenue. The annual turnover of Marks & Spencer was split into two parts, which is General Merchandise and Food. In the U.K market, General Merchandise product was decrease by 3.5%, it may due to the fact that cause the good performance of women’s wear and men’s wear, M&S trying to expended their market to kid’s wear. At the same time food part also decrease by 0.1%. But in the international business area, M&S performed well. It has a 25.9% increase of the revenue outside the U.K, which makes them has a slight rise in 2009 compared with 2008. The business of John Lewis could divide into John Lewis and Waitrose two parts. And John Lewis sales were lower than 2008, but the sales of Waitrose was good. So generally speaking, the sales of John Lewis in 2009 was better than 2008.

Administration expenses refer to the cost like salaries fee employee, marketing expenditures. Both company increases this part of spends from 2008 to 2009. For Marks & Spencer, they continue invest and keep their long-term plan. One of the reasons for M&S is the opening of their international stores, till 2009 M&S have 296 stores in 40 areas. Compared with 2008, there are 32 new stores open in 2009. At the same time, since the recession affect retail industry; M&S spent a lot to enhance their logistic network in order to establish an efficiency supply chain. Although they cut their spend on employees at 0.1% rate, the cost of administrative in 2009 still higher than 2008. Cause John Lewis is partnership cooperation, so the pension of their employee still maintains the same level as it was in 2008. But as Waitrose opened 11 new stores and John Lewis has inject some of the capital in the relocated new store in Liverpool and Leicester. Beside of that, John Lewis spent more money on some efficiency project, like the new Oracle finance system implemented in Waitrose and their head office.

Net Profit is the bottom line of the owner’s earning for the period. The net profit was go down in 2009, it is because the limitations from the High Street as well and M&S insist to keeping their products in the level of value and quality. And the decrease of General Merchandise and Food sold and high spent on new stores cause the profit of M&S from 2008 to 2009 decreased 6.2%. John Lewis won a lot of profit mainly because of Waitrose, they introduce new technic on their products like ‘forgotten cut’, which is known as the economic cut on meat. And the quality of Waitrose like grantee 100% British fresh pork, attract lots of customers to buy. So the profit of Waitrose keeps increasing all the time, which contributes a lot to John Lewis’ business.

Trend

Trend is about the changes of the company through the percentages over a period. From the income statement, the changes of M&S and John Lewis can be shown through the different figures. In this situation, 2009 is the base year.

Trend % = Any year

Base year

Income statement

‘ M&S John Lewis

2008 2009 % 2008 2009 %

Turnover 9,022,000 9,062,100 99 6,052,200 6,267,200 96.6

Cost of sales -5,535,200 -5,690,200 97 -4,007,600 -4,195,400 95.5

Gross Profit 3,486,800 3,371,900 103 2,044,600 2,071,800 98.7

Administration Expenses -2,447,200 -2,644,500 92.5 -1,675,100 -1,919,600 87.3

Other operating income 49,700 41,500 120

Operating Profit 1,211,300 870,700 139 369,500 152,200 243

Other income and interest received 64,400 50,000 129 50,300 184,500 27.3

Profit before interests 1,275,700 920,700 139 238,700 336,700 71

Interest paid -146,600 -214,500 68.3 -40,000 -55,100 72.6

Profit before tax 1,129,100 706,200 160 198,700 281,600 70.6

Tax -308,100 -199,400 155 -59,400 -48,100 123

Net profit 821,000 506,800 162 139,300 233,500 59.7

Operation profit

Compared with 2008, in 2009 the operation profit of M&S was decreased by 1.4%. The reason of this trend was due to the changes from different aspects like retail staffing, distribution and marketing. The money M&S spent on retail staffing was slight grew, because it is necessary to improve the service to satisfy the customer. At the same time, the expenditure on distribution was increased 6.9%, because of the price of fuel was higher than 2008 and the busy delivery of furniture. All these new expenditures cause the decline of the operation profit about M&S.

For John Lewis, it could be divided into two parts, which is John Lewis department store and Waitrose. The Operating profit of John Lewis department store was down from ‘200million to ‘146 million. And Waitrose was declined of 3.4% from 228 million to ‘211.6 million.

Vertical

In the income statement, vertical analysis is about the relation between turnover and other income items.

Vertical Analysis % = Each income statement item

Turnover

Income Statement

‘ M&S John Lewis

2008 ‘ 2009 % 2008 % 2009 %

Turnover 9,022,000 100 9,062,100 100 6,052,200 100 6,267,200 100

Cost of sales -5,535,200 -61.4 -5,690,200 -62.8 -4,007,600 -66.2 -4,195,400 -67

Gross Profit 3,486,800 38.7 3,371,900 37.2 2,044,600 33.8 2,071,800 33

Administration Expenses -2,447,200 -21.7 -2,644,500 -29.2 -1,675,100 -27.7 -1,919,600 -31

Other operating income 49,700 0.6 41,500 0.46

Operating Profit 1,211,300 13.4 870,700 9.6 369,500 6.1 152,200 2.4

Other income and interest received 64,400 0.7 50,000 0.6 50,300 0.8 184,500 2.9

Profit before interests 1,275,700 14.1 920,700 10.2 238,700 3.9 336,700 5.4

Interest paid -146,600 -1.6 -214,500 -2.4 -40,000 -0.6 -55,100 -0.8

Profit before tax 1,129,100 12.5 706,200 7.8 198,700 3.3 281,600 4.5

Tax -308,100 -3.4 -199,400 -2.2 -59,400 -0.1 -48,100 -0.07

Net profit 821,000 9 506,800 5.6 139,300 2.3 233,500 3.7

Cost of sales: The impact of cost on sales for both companies increased a lot from 2008 to 2009. And the costs of sales contribute to more than 50% proportion of the revenue for either M&S or John Lewis. M&S increase their cost of sale by 1.4%, at the same time John Lewis slightly grew by 0.8% spent on their sales. In spite of the economic recession, neither of the company compromises the quality of their selling products. As M&S, they provided some offers to the customer to promote their product foe sale, like ‘ Dine in for TWO for ’10’ and ‘One Day Christmas Spectaculars’, which in order to attract more customers. For John Lewis, each of Waitrose store promise fresh meat to provide and the new technic implemented in the store, which increase the cost of sale a lot. But as John Lewis always trying to be the cheapest in the neighborhood, so the changes on cost of sale it not as much as M&S.

Administration Expenses

Both of the companies spend more money on the administration. M&S drop from -21.7% to -29.2%, which largely increased by 7.5%. And John Lewis increased of 3.3% of their administration fee. M&S has such a big increase because it not only stands on the U.K market, but also focuses on expend their international business. During 2008 to 2009, they have 32 additional stores in their business chain and all the cost of distribution and logistic is increased proportionately. Increasing money on logistic and delivery service makes their supply chain more efficiency. And John Lewis only focus on dominant market, they introduce some new financial system named Oracle in Waitrose and their head office, which improve their efficiency of daily routine.

Operating Profit

Both of the companies experience a drop of operating profit. M&S was drop from 13.4% to 9.6%. And the operating profit of John Lewis was decrease by 3.7%, which almost as same as M&S. This means the income of both companies is less than they spend. This can due to the recession of economy recession. Each company is trying to use their product with high quality and worth value to earn the trust from their customer.

Tax

Both of the companies decrease their cost on tax. M&S saved 1.2% compared with 2008, and John Lewis almost maintain the same mount, which is from -0.1% to -0.07%. The tax charge of John Lewis decreased a little compared with 2008, according to the annual report 2009 this is mainly because of the non- taxable gain on the sale of the investment in Ocado.

Balance Sheet

Balance sheet could reflect the business spend of the company, and each of the percentage represent the how much does each item occupy the total assets. Through the percentage it can be seen that how much money could the company receive.

M&S John Leiws

2008 % 2009 % 2008 % 2009 %

Assets 4,704,000 66 4,834,000 67.2 3,021,800 79.3 3,176,800 78.6

Land & Buildings 2,421,000 33.8 2,458,000 34.2

Fixtures and Fittings 2,096,300 29.3 2,265,500 31.5

Intangible Assets 305,500 4.3 400,300 5.6 3,120,000 82 3,283,600 81.2

Investments 969,800 13.5 573,300 8 31,300 0.8 21,700 0.5

Total Fixed Assets 5,979,300 83.5 5,807,600 80.7 3,120,000 82 3,283,600 81.3

Stock & WIP 488,900 6.8 536,000 7.5 344,900 9 352,300 8.7

Trade Debtors 84,600 1.2 83,500 1.2 40,500 1 45,800 1.1

Bank & Deposits 318,000 4.4 422,900 5.9 121,600 3.2 197,600 4.9

Other current Assets 223,000 3.1 201,700 2.8 171,200 5 137,700 3.4

Investments 67,200 0.1 145,700 2 13,800 0.4 23,400 0.6

Total Assets 7,161,000 100 7,197,400 100 3,812,000 100 4,040,400 100

Long Term Liabilities -3,215,400 -45 -2,808,800 -39 -1,183,500 -31 -1,520,000 -37.6

Current Liabilities -1,988,900 -27.8 -2,306,900 32.1 -940,800 -24.7 -798,000 -19.8

Shareholders Funds 1,956,700 27.3 2,081,700 28.9 1,687,700 44.3 1,722,400 42.6

Issued Capital 396,600 5.5 394,400 5.5 4,800 0.1 600 0.01

Total Reserves 1,560,100 21.8 1,687,300 23.4 1,682,900 44 1,721,800 42.6

Total Assets less Current Liabilities 5,172,100 72.3 4,890,500 68 2,871,200 75.3 3,242,400 80.3

Fixed Assets

Fixed assets are those things maintain the life t over one year. Tangible fixed assets refer to physical assets such as buildings, land and intangible assets refer to items such as reputation and satisfaction from the customer.

Both M&S and John Lewis have a high percentage of fixed assets. But they also both are experiencing decline in the percentage of assets that are fixed. This reflects the expenditure of both companies not doing so well, they all need to open new stores and buying new warehouses to improve their efficiency, which influence the percentage.

Long-term liabilities

Long-term liabilities are refers to the debts that are not necessary to be paid in one year.

John Lewis has a lower rate of long-term liabilities (-31% to -37.6%) than M&S does (-45% to -39%). It means that John Lewis will be in a better position to arrange the financial of the company when it needs to pay the debt.

Ratio

Ratio analysis also gives a standard to compare two companies. From the ratio of profitability, liquidity and efficiency, the financial performance of each company could be evaluated.

Profitability: Gross Profit Margin

Gross Profit Margin = Gross Profit x 100

Turnover

M&S John Lewis

2008 2009 2008 2009

Gross Profit 3,486,800 3,371,900 2,044,600 2,071,800

Turnover 9,022,000 9,062,100 6,052,200 6,267,200

Gross Profit Margin 38.65 37.21 33.78 33.06

The figure shows that the gross profit margin of M&S is higher than John Lewis, which indicate that M&S could well arranged their money to earn profit than John Lewis. And during the two years, both of the companies maintain the same level of their usage of money.

Liquidity: Current Ratio

Current Ratio= Current Assets x 100

Current Liabilities

M&S John Lewis

2008 2009 2008 2009

Current Assets 1,181,700 1,389,800 692,000 756,800

Current Liabilities -1,988,900 -2,306,900 -940,800 -798,000

Current Ratio -0.59 -0.6 -0.74 -0.95

It can be seen from the chart that the current ration of M&S almost keep the same, but the ratio of John Lewis has drop by 0.21 from 2008 to 2009. It means that by using its current assent M&S could arrange the assets to liabilities better than John Lewis.

Efficiency: Asset Turnover

Asset Turnover= Sales (Turnover)

Total Assets

M&S John Lewis

2008 2009 2008 2009

Sales 9,022,000 9,062,100 6,052,200 6,267,200

Total Assets 7,161,000 7,197,400 3,812,000 4,040,400

Asset Turnover 1.26 1.26 1.59 1.55

Both of the company performs well in asset turnover. The figures of both two companies are above 1. It could be due to the assets that each company has, and the intangible assets could directly add the value. In this part, John Lewis does little better than M&S.

Section4: Non-Financial Analysis

In spite of the data from the financial analysis, the non-financial elements could also be important for the successful of the company. When benchmark the two companies in the same industry, the analysis from the operations strategy like advertisement or the how to expend their business also critical for the comparison of both companies. In the following, this report will address two key elements for M&S and John Lewis, which makes the differences between two companies in the non-financial aspect.

Number of Stores

M&S

In the domestic market, M&S opened 75 stores form 2008 to 2009, and those openings included the 100th Simply Food store of M&S. There are several M&S stores located in each service stations, train stations and airports. And they also improved the appearance and decorate 24 stores, with 80% of the new store is in the modernized format. In the future, M&S will complete decorate the remaining 20% of the stores.

At the same time, M&S have a big move on their international business during the year. It has 32 new stores opened during the year and the total M&S International store amount reached 296. Now in 40 areas of the world, M&S have continued their strategy of closing smaller stores to concentrate on their final destination. In the international business area, M&S now have new stores in Libya, Montenegro, and in China where they opened a 40,000 square flagship store in Shanghai. In the future, M&S is ready to increase their International selling space by 20% in the coming year and expend around 50 new stores across Europe, the Middle East and India.

John Lewis

As the top10 retail store of the U.K, Compared with M&S, John Lewis always focuses on the dominant market. It has 28 John Lewis department stores and 241 Waitrose supermarkets in the U.K. And from 2008 to 2009, the new shop in Leicester is building a firm foundation in this new location, and sales of the shop in Liverpool, following its relocation, exceeded expectations. John Lewis Cambridge celebrated a successful first year in its new location. In order to expend their business, John Lewis opened two Waitrose shops in Dubai. John Lewis remains committed to opening full range department stores in suitable locations in the future. John Lewis aims to expand through a combination of new department stores, and exploitation of the on-line shop offer. Meanwhile, they also are trying to explore the possibility of opening smaller department stores.

Waitrose stores increased fast with 11 in the UK in 2009, which including two new market town shops and the first new convenience shop format. The target of Waitrose is to increase sales by continuing to extend its store presence meanwhile keeps providing its core customer the best services and adjust reasonable price. The ‘essential Waitrose’ is a operation strategy for Waitrose, which offering 1,400 everyday products ‘with the Waitrose quality you’d expect, at prices you wouldn’t’. Market town and convenience stores were successfully opened during the year. Waitrose enhanced its customer offer with reasonable price, promotion offers, product development and new stores from 2008 to 2009. And a further plan for Waitrose is to opening 22 additional stores.

Supply Chain Efficiency

M&S

M&S always keeping focus on an efficiency supply chain with low cost, and it keeps invest in systems and infrastructure so that goods produced overseas can now be transported directly to all of the markets without the need to first come through the UK. This will dramatically reduce export costs and speed up the distribution. Besides to the construction is underway on a distribution center in Bradford that will plan open in late 2010 consolidating the stock holdings and improving our speed and flexibility in getting product into stores. Following two trials they are also investing in mechanizing our food distribution centers to improve accuracy and efficiency in picking frozen products.

John Lewis

John Lewis is planning the opening of the new distribution center in Milton Keynes, Magna Park, illustrates their operations strategy to become more responsive and competitive. For example, Magna Park, the new John Lewis Distribution Centre near Milton Keynes was open on 29 May 2009 and it will play a significant role in supporting the ambitious expansion plans of John Lewis.

Section5: Company Potential

A SWOT analysis has been used here to address the strength, weakness, opportunity and threat of M&S and John Lewis. By pointing out the key information, the business performance of both companies could be identified clearly.

SWOT of Marks & Spencer

Strength

? As the biggest cloth retailer in the UK, the clothes that customer buys among the market is more than 1 in 10 from M&S. M&S stand at a strong market position as a cloth retailer. The General market share value of M&S is 10.7% and the market share volume is 11.2%.

? M&S have 668 stores across UK. Including all types of store, such as Premiere Store, Major Store, Retail Park, Outlets and Simply Food franchises, which including 75 new stores opened during 2008 to 2009.

? From 2008 to 2009, the sales of M&S were benefited from the international business, including the additional 32 stores joining the chain. Till 2009, M&S have 296 stores in 40 areas, across Europe, Middle East and India.

? With 125 years history, M&S always devote their business with Quality, Value, Service, Innovation and Trust. As one of the most popular retailer, M&S have the most satisfaction from their customer. With such a strong brand image, M&S developed their business well.

Weakness

? Pay too much attention on International market, lost lots of market share in domestic.

? Overcharge the spend on operations, the short term liquidity ability not strong enough to face their cash problem.

Opportunity

? Have a long plan of business growth, by put more attention on international business, M&S looking forward their business achieve 15 to 20% of group revenue in the following year.

? Have clear definition of each catalog that they are producing. Some stands for unique and classify the different kind of design for each generation.

? Using special offer and price plan. Like ‘Wise Buys’ and ‘Dine in for Two for ’10’, offer a better value for customer with good quality.

? Develop E-commerce, by explore online shopping it will be more convenient for customer to purchase products.

Threats

? Intense competition among the retail industry. Each retailer trying to use high quality and suitable price to attract customer. As M&S, it affords double pressure from clothes industry and food industry.

? Lower customer confidence cause the economic recession, like the core female shopper of M&S cut their spending on cloth all the time. This impacted on the womenswear figures keeps decline. With volume market share down to 9.2% from 10.0% and value market share down to 10.5% from 11.1%.

SWOT of John Lewis

Strength

? The unique ownership structure of John Lewis makes sure that their entire employee is one of the partnerships. This offers to the high motivate services with good quality, which makes John Lewis extraordinary good than their cooperation.

? The trust and confidence from customers makes John Lewis selling their products well. Either John Lewis department store or Waitrose has distinguished market position of itself to offer what kind of service.

? Long term planning about future development. And Waitrose opens the new store in Dubai, which helped John Lewis open the International market.

? Strong brand image named Never Knowingly Undersold

Weakness

? Declining sales and profit loss of John Lewis department store

? Low market share in international business

Opportunity

? Recently announced a three-year program of John Lewis to reorganize our branch structures and the launch of a new ‘essential Waitrose’ range, which will offer over 1,400 everyday quality products at very competitive prices.

? John Lewis’ on-line offer has been further strengthened with a 35% increase in the number of lines available on our website and with the launch of the ‘Click & Collect’ service, the first step of a wider ambition to become truly multichannel. At the same time online service Waitrose Deliver is now available in 100 branches

Threat

? Slower growth has intensified competition, creating margin pressure as retailers compete more aggressively on price to prop up volumes. The trading conditions for 2009 to continue to be very tough, with ongoing pressures on consumer spend and low consumer confidence.

? The lower profit affects both of its international and domestic expand plan deeply.

Section6: Investor Potential

Through investor potential, the attractiveness of M&S and John Lewis can be examined. It determines how many investors will to invest to the company base on the good business performance. The amount of investor is proportio