Inflation hits John Lewis transformation timetable but half-year losses ease
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The John Lewis Partnership (JLP) has revealed its transformation plan will take two more years to complete than expected, while revealing a drop in losses over the first half of its financial year.
The employee-owned company, in which staff are known as partners, said that a combination of higher costs due to inflation and a need for greater investment had hit its turnaround timetable.
It was originally scheduled to have been completed in the 2025/26 financial year and deliver greater productivity and efficiency to boost profits following years of disappointing financial performance.
The troubles have knocked its famous annual bonuses to partners, with staff getting nothing last year.
The partnership, which comprises the eponymous John Lewis department stores and Waitrose supermarkets, reported a bottom line loss before tax of £56.2m between February and July.
That was a 43% improvement on the £99.2m sum in the same six-month period last year.
The group reported a 2% increase in sales across the partnership to £5.8bn.
It credited demand for its beauty and fashion lines in John Lewis but said sales in technology and “big ticket home items” remained subdued given the evolving cost of living crisis.
Waitrose sales were up 4% to £3.7bn.
John Lewis had launched its five year Partnership Plan in 2020.
It targeted a return to profits of £400m through measures to date that have included job losses but has proved more tricky to deliver in the tough economic climate given soaring additional costs – £179m alone last year.
The partnership said on Thursday that achieving its strategy would take precedence over bonus payments, which were not paid for the last financial year.
At the same time, it forecast an improvement in its annual results for the 12 months to the end of January.
“While the economic outlook and consumer sentiment remain uncertain, on the back of stronger Waitrose trading and further efficiency savings in the second half, we expect an improved full-year financial performance,” the company said.
“We typically make most of our profit in the last three months of the year, so a successful peak is always critical.”
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Partnership chair Dame Sharon White, added: “The partnership is a unique model that has been tested and come through stronger many times in our 100 year history.
“While change is never easy, and there is a long road ahead, there are reasons for optimism.
“Performance is improving. More customers are shopping with us. Trust in the brands and support for the partnership model remain high.”
But Zoe Mills, lead retail analyst at GlobalData, said the company’s update was a clear setback.
“John Lewis & Partners has succumbed to the pressures of the cost of living crisis, as the mid-market player struggled to retain appeal in a retail market plagued by consumers seeking low prices,” she wrote.
