The information contained within this announcement is deemed by the Group to constitute inside information as stipulated under the Regulation 11 of the Market Abuse (Amendment) (EU Exit) Regulations 2019/310 ("MAR"). With the publication of this announcement via a Regulatory Information Service, this inside information is now considered to be in the public domain.

                                                9 November 2021

JOHN LEWIS OF HUNGERFORD PLC

FINAL RESULTS

 John Lewis of Hungerford plc ("John Lewis of Hungerford" or the "Company"), the specialist kitchen manufacturer and retailer, announces its final results for the year ended 30 June 2021.

Chief Executive's Business Review

We are pleased to provide a review of our FY21 financial year to 30 June 2021. As the prior year was significantly impacted by the Covid-19 pandemic, we have also provided data from FY19 in order to provide our shareholders with a more meaningful comparative.

Overview

As reported within our trading update released on 12 August 2021, we are pleased to report that the second half trading recovered our first half losses in full, resulting in a full year profit before tax of £80k (2020: Loss £885k; 2019: Loss £220k). After an immensely disruptive year, with showroom closures for 18 weeks, we are particularly pleased with the efforts of the teams within the Company which resulted in us delivering a profitable year.

The year finished with a positive gross cash position of £1,302k.  The Company has total loans of £1,137k, of which £1,079k is secured on its freehold properties. Net cash, excluding IFRS 16 lease liabilities, was therefore £165k (2020: net debt £708k; 2019: net debt £314k).   The Company was grateful for the UK Government support received during the year, including the deferral and re-phasing of payments for VAT and PAYE.  The re-phased payments were all met within the timescales agreed with HM Revenue and Customs, and by year end £78k remained outstanding, which is scheduled for full repayment by February 2022   The Company is pleased to have improved from a net debt of £708k to a positive net cash position after loans of £165k in the financial year, a positive improvement of £872k, with EBITDA (pre IFRS 16) of £424k (2020: -£388k). Customer deposits at the year-end were £363k higher than last year, reflecting the strength of the order book at the year-end.

In February 2021, all the Directors and a PDMR (Person Discharging Managerial Responsibilities) all wished to acquire shares in the Company, and this was effected by a subscription for new shares, which increased cash in the Company by £49k.  

The table below illustrates the performance against the Covid-19 impacted FY20 year and also the non-Covid-19 disrupted FY19 year. It is pleasing to note that with revenue 5% down on FY19, the gross margin is broadly in line, demonstrating the management's focus on cost control  to ensure resilience in our operating model, during a period of supplier price increases, throughout this challenging period.

Financial Summary

Marketing

Core to the performance in the year under review has been our ability to adapt to changing consumer behaviours, instigated by the closure of our showrooms for 18 weeks of the year and by moving our business operations back online, as required. The excellent work to produce virtual showrooms very promptly after the initial lockdown in March 2020 and ensure consistency in our marketing throughout the pandemic, has ensured that the brand has remained strong and visible throughout. The Company has seen a discernible shift in its following across social media platforms, through the Company's digital development strategy. With a new SEO partner from the start of FY21, several high-profile collaborations and a data driven approach to our digital campaigns, we continue to generate record levels of interest, driven in part by gains in market share and also from the 'pent up' demand arising from the first, long lockdown, when focus on improving the home became a customer priority. Our online activity has demonstrated the strength in our marketing and allowed us to attract customers through our digital channels and drive footfall to our showrooms when they re-opened. This has ensured the showroom estate is consistently busy in all locations, with high levels of quoted design activity, which will continue to be recognised in FY22.

We have mentioned previously the increase in demand within the home improvements sector, with many home related companies experiencing an uplift in enquiries; the demand has been significantly higher than in recent years. Shortages of skilled labour within the industry and the trades people required to install new kitchen and bedroom units, together with the more general shortage of skilled labour within the construction sector, has impacted lead times for many companies. We have been fortunate to retain a highly skilled team in all areas of our business and our lead times remain competitive, and therefore attractive, for customers looking at luxury, painted kitchens and bedrooms. The ongoing recruitment of key personnel in all areas of the business remains a priority for the Company.

Kitchens sold in the year exceeded our recent performance, with a reduction in our bedrooms activity in the year, primarily due to a shift in consumer priorities for their living spaces. We have seen the bedrooms area of the business returning to levels achieved previously, in the current financial year.

Operations

The integrated retail model developed throughout FY20 has proven effective over FY21. Promoting an 'appointment only' approach to our design consultations has improved the effectiveness of our design team, together with enhancing the customer experience in-store. Virtual consultations are still offered to customers unable to visit a showroom and these continue to be popular, supported by our advances in the use of our virtual showrooms and screen sharing technology.

We took the decision to close our central Oxford Showroom during the year, on expiry of the lease. This has given us the opportunity to utilise the space within our head office showroom in South Oxfordshire, to showcase both our kitchens and our bedrooms offering. Customers will benefit from a visit to our production facility, once restrictions ease, which we anticipate being a popular and important element of our customer experience.

The use of our new finance offering for customers, provided by Hitachi Capital UK, has been very well received, with almost £900k of sales secured in FY21, using the facility. This exceeded our ambitions and has become a significant component in our customer journey. We look forward to a continued partnership with Hitachi Capital UK, who have been impressed with our exceptional customer satisfaction scores.

Our systems improvements continue to take priority to ensure we are able to support our teams to operate as efficiently as possible. The implementation of the CRM system was the first step in our programme of improvements and we look forward to building our IT framework to manage our growth over the coming years.

Our development team also worked effectively to ensure the timely launch of our new Beaded Shaker range of door style, which has been well received by customers.

There have been widely reported disruption to supply chains nationally over the last 18 months. The industry has experienced significant delays across all bought-in items, together with raw materials. Price increases have been seen in all areas, at an unprecedented level. The operational team have had a challenging year, requiring close management of the supply chain to ensure continuity of supply and the successful fulfilment of customer orders.

In view of these many challenges, we are pleased to report a gross margin broadly in line with the non-Covid-19 disrupted FY19 year, with a 5% reduction of revenue.

Investments in key supporting roles within the Company have been made as we progress throughout the current financial year, given the increased levels of consumer demand.

We continue to work closely with all of our partners to ensure the continued safety of our employees, our customers and our suppliers. We have ensured an ongoing focus on the health, safety and wellbeing of our people.

Trading Outlook

As stated in our trading update released on 12 August 2021, the Company entered the new financial year with an order book substantially larger than in recent years. The level of orders secured in the first 18 weeks of the year has remained high. Despatched sales, forward committed orders and future orders against which a first stage deposit has been taken, stood at £7.4m (2020: £4.9m; 2019: £4.4m), which is significantly ahead of the previous two year comparatives.

The unprecedented business climate throughout the reported period has been challenging and the response of all of our stakeholders has been instrumental in the results we report today. The efforts of all those within the Company together with our relationships with our partners and suppliers, all of whom have been exceptionally supportive, give the Board confidence in the Company's future performance.                               

Our employees have been outstanding in their commitment to provide a high quality service to our customers and driving value for our shareholders, and thereby ensuring the resilience of the Company, throughout this turbulent period.                                                                                                                                                                                              

On behalf of the Board, I thank them all for their dedication throughout the year as we look forward to a period of growth and a return to sustained profitability, as we enter 2022, during which the Company will celebrate its 50th Birthday.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 

Kiran Noonan

Chief Executive Officer

8 November 2021

Enquiries:

John Lewis of Hungerford plc                                                                                                     01235 774300

Kiran Noonan - Chief Executive Officer / Acting Chairman

Allenby Capital Limited (Nominated Adviser and Broker)                                                      020 3328 5656

David Worlidge / Nick Naylor / George Payne (Corporate Finance)

Matt Butlin (Sales and Corporate Broking)