The John Lewis Partnership reported half-year losses more than double as trading conditions worsened.
Losses before tax and exceptional items reached £89 million for the six months to August 1, up from £34 million a year earlier. Pre-tax losses widened to £124 million from £88 million in the previous comparable period, a significant deterioration driven by increased expenses.
The employee-owned group owns the department store chain and Waitrose supermarkets. It said department store sales fell two per cent amid consumers holding back on discretionary spending, while Waitrose sales rose four per cent. Overall half-year sales increased two per cent to £6.3 billion, reflecting a mixed performance across the partnership’s diverse portfolio of retail assets.
Costs and leadership changes
Higher costs, including a head office restructure, weighed on the results. Chair Jason Tarry said: “Our results reflect our continued investment in our transformation, a more challenging trading environment and the increased costs of doing business.”
Consumers are holding back on spending on bigger ticket items, according to the official statement. They’re cautious at the moment, given what’s going on in the world. This hesitation is particularly evident in the discretionary spending habits of households facing economic uncertainty.
The wider economic and geopolitical situation has weighed on customers during the first half. As in every year, the majority of our profit is earned in the second half, and the full-year outcome will be determined by peak trading. The group anticipates the traditionally stronger Christmas period will play a key role in shaping the final financial outcome.
The group remains cautious for the second half of the year, which includes the traditionally stronger Christmas period. While it expects a seasonal bounce, the current trading backdrop suggests a year of volatility ahead. Management is preparing for an unpredictable market environment despite the seasonal uptick expected later in the year.
Change is underway at the top of the department store business. Will Kernan, a former non-executive director at John Lewis, has taken over from Peter Ruis as managing director. Kernan’s career has included stints as boss of high street retailers River Island and The White Company, bringing a wealth of experience from rival fashion-focused brands.
