John Lewis losses widen to £124m amid rising costs
John Lewis Partnership has seen its pre-tax loss widen to £124 million in its first half, from £88 million a year earlier.
The partnership was hit by increased costs in the period as operating became more expensive. This was attributed to increased employment costs, including the annualisation of last year’s National Insurance rise, technology modernisation, and the cost of managing operations through the summer heatwaves to maintain service levels for customers. The partnership also increased staff pay by £108 million.
Across the John Lewis Partnership, sales grew by 2% to £6.3 billion in the 26 weeks to 1 August, after Waitrose sales rose by 4% to £4.3 billion. Adjusted operating profit at the supermarket was £103 million, down £7 million, after it incurred the extra cost of running its operations through the heatwaves and increased investment in loyalty and lowering prices.
Subscribe to TRBMeanwhile, sales at John Lewis department stores declined by 2% to £2 billion, as the retailer faced a more “challenging” market. The partnership said John Lewis engaged in more promotional and clearance activity in the half year, supported by disciplined stock management, which contributed to full-price sales growing by 5.5%.
The retailer’s adjusted operating loss was £83 million compared to £53 million last year, following softer trading, cost growth, and the partnership’s decision to continue investing in the transformation of the brand.
John Lewis Partnership’s pre-tax loss before exceptional items was £89 million, compared to £34 million last year.
Jason Tarry, chairman of the John Lewis Partnership, said: “Our first half results reflect our continued investment in our transformation, a more challenging trading environment and the increased costs of doing business.
“Partnership sales grew, customer satisfaction remains strong and the stores we’ve transformed are outperforming the rest of our estate. That gives us confidence in the commercial headroom for both Waitrose and John Lewis.”
John Lewis Partnership said it is remaining cautious in its outlook for its second half, adding that its full-year outcome will be determined by peak trading.
Tarry said: “We are managing the business with discipline and have chosen to keep investing in our customers, Partners and the long-term strength of our brands.
“While losses grew in the half, our employee-owned model allows us to take that longer-term view, supported by our financial strength.
“As in every year, our profit is earned in the second half so our focus now is on serving customers brilliantly through our peak trading period. I’m grateful to all our partners for everything they continue to deliver.”
