1 hr ago
John Lewis Posts £124m Loss Amid Retail Cost Pressures
John Lewis Partnership owns the John Lewis department stores and Waitrose supermarkets.
It lost £124m in the first half of its financial year.
The loss was bigger than the loss recorded during the same period last year.
John Lewis stores struggled because people delayed buying expensive household items.
Waitrose performed better because people continued buying everyday essentials.
However, Waitrose also earned less operating profit because its costs increased.
The company is investing in stores, technology and warehouses to improve its future.
Its leaders hope stronger Christmas sales will help the business return to profit.
John Lewis Partnership reported a £124m pre-tax loss for the six months to August 1, up from £88m a year earlier.
Group sales rose 2% to £6.3bn, but John Lewis sales fell 2% while Waitrose sales increased 4%.
John Lewis’s adjusted operating loss widened to £83m as shoppers delayed purchases of homeware, furniture and electrical goods.
Waitrose’s adjusted operating profit fell 6% to £103m despite stronger sales, partly because of higher costs and heatwave-related refrigeration challenges.
The Partnership is investing in technology, stores and automation while urging the government to reform business rates and reduce employment costs.
- Who
- John Lewis Partnership, including its John Lewis and Waitrose businesses, reported the results; Jason Tarry commented on the group’s position.
- What
- The employee-owned retail group reported a £124m first-half pre-tax loss, with weaker John Lewis sales and higher operating costs.
- Where
- Across the United Kingdom, including John Lewis department stores and Waitrose supermarkets.
- When
- For the six months ending August 1; the results were reported as the group entered the second half of its financial year.
- Why
- Higher employment and operating costs, cautious consumer spending, weaker demand for expensive goods and continued investment reduced profitability.
Long-term investment case
Immediate cost-pressure concerns
Investment strategy
Long-term investment case
John Lewis Partnership says it is deliberately continuing to invest in stores, electronic shelf labels, warehouse automation and customer loyalty because its employee-owned structure allows a longer-term approach.
Immediate cost-pressure concerns
The investment adds to pressure while the group is already reporting a larger loss and operating in a difficult department-store market.
Business costs
Long-term investment case
The Partnership argues that government action, especially business-rates reform and measures to support employment, could help retailers invest and grow.
Immediate cost-pressure concerns
The group’s higher employment costs, including increased employer national insurance contributions, are already weighing on results and limiting room for error.
Department-store outlook
Long-term investment case
John Lewis expects to return to profit and is relying on the stronger second half, including Christmas trading, to support its recovery.
Immediate cost-pressure concerns
Cautious shoppers, intense online competition and the expense of maintaining large stores make the turnaround uncertain, particularly for big-ticket categories.
Key facts
- First-half pre-tax loss
- £124m
- Prior-year first-half loss
- £88m
- Group sales
- £6.3bn, up 2%
- John Lewis sales
- £2bn, down 2%
- Waitrose sales
- £4.3bn, up 4%
- John Lewis adjusted operating loss
- £83m
- Waitrose adjusted operating profit
- £103m, down 6%
Quotes
Jason Tarry
Chairman of the John Lewis Partnership
“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.”
easterneye.biz
Robyn Duffy
Analyst at RSM UK
“particularly exposed to big-ticket, deferrable categories like home, furniture and electricals – exactly where these consumers are choosing to cut back or delay spending”
easterneye.biz
Sources
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