John Lewis Partnership posts sharp drop in annual profits
The John Lewis Partnership has posted a sharp drop in full year profits as it announced that it will be embarking on a strategic review.
In the year to 25 January, profit before partners’ bonus, tax, exceptional items and IFRS 16 was £123 million compared to £160 million in the previous year.
The weaker performance was driven by reduced profitability at the John Lewis department store chain where operating profits before exceptionals and IFRS 16 were down £75 million to £40 million. The partnership said the department store suffered weaker sales in the home and electricals categories.
In contrast, its Waitrose supermarket business put in a “solid” performance with operating profits before exceptionals and IFRS 16 growing by £10 million to £213 million year-on-year.
The results mean the partnership will be giving partners a bonus of 2% this year, which is the lowest percentage since 1953 when no bonus was paid.
Looking ahead, the partnership said it will be refreshing its home offering at John Lewis by introducing more inspirational and contemporary ranges. It will also be making improvements to the departments store’s pricing, delivery and online offering,
In addition, it will be investing in Waitrose’s website ahead of its partnership with Ocado ending in September. It will also be recruiting 2,400 new partners and building a new fulfilment centre in Enfield to meet increased demand for Waitrose products online.
However, three Waitrose shops will be closed in Helensburgh, Four Oaks and Waterlooville in the coming months.
The John Lewis Partnership also revealed that it will be launching a strategic review that will focus on strengthening its core retail business and developing new services outside retail. The review is expected to be completed in the autumn.
Future plans will also include a slimming down the partnership’s head office functions and promoting closer working between Waitrose and John Lewis staff as looks to make it easier for customers to shop across the two brands.
Sharon White, John Lewis Partnership chairman, said: “We need to reverse our profit decline and return to growth so that we can invest more in our customers and in our partners. This will require a transformation in how we operate as a partnership and could take three to five years to show results. We are stepping into a vital new phase for the partnership and I have no doubt we will come through it stronger.”
