John Lewis profits down in first half
The John Lewis Partnership saw its pre-tax profits decline by 53.1% to £26.9 million in the first half of its financial year as the business was impacted by costs relating to restructuring.
Group gross sales increased by 2.3% to £5.40 billion as Waitrose and John Lewis both grew their sales by 2.3%.
Operating profit, before exceptional items and property profits, was up 10% at the John Lewis department store chain but down 18% at Waitrose as the supermarket was hit by higher cost prices.
Sir Charlie Mayfield, John Lewis Partnership chairman, said: “Our results also reflect the acceleration of our strategy to ensure the group's success in the future.
“This has included: changing the way we operate Waitrose branches, creating new flexible team structures with broader responsibilities; further changes in John Lewis to adapt the business for the future; and moving from divisional to group functions across finance, personnel and IT.
“As a result, we incurred exceptional costs of £56.4 million. Given the key role our partners play, we are very focused on managing the risk of these changes carefully.”
John Lewis said the first six weeks of the second half had seen group gross sales rise by 2.4%, with a 0.4% increase in like-for-like sales at Waitrose and a 2.6% uplift at John Lewis.
Looking ahead, Mayfield said: “We are well set for our all-important seasonal peak, but expect the headwinds that have dampened consumer demand and put pressure on margins to continue into next year.”
The company said its full year profits will depend as always on the final quarter which typically accounts for well over half of its profits before exceptional items.
Mayfield added: “We expect margin pressure to continue into the second half year and we will incur higher pension accounting charges, as a result of low market interest rates at the start of the year. These will impact our overall profits.”
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