The John Lewis Partnership has released its half-year report, revealing an improvement in its financial performance compared to the previous year. However, the company still falls short of pre-pandemic figures. For the first six months of the year, the company reported a profit before exceptional items of £69 million, a significant increase from the loss of £55 million in the same period last year. In comparison to the first half of 2019/20, the company saw an improvement as it had incurred a loss of £52 million during that period.
The company attributed its improvement to cost reductions and savings of £66 million in the first half, as well as receiving business rates relief of £58 million. However, it also faced exceptional costs of £98 million related to settling lease obligations due to shop closures and dealing with redundancy costs.
Taking these exceptional items into account, the Partnership reported a loss before tax of £29 million. While this is a significant improvement from the previous year’s loss of £635 million, it is significantly lower than the pre-pandemic profit of £192 million in 2019/20, which included a one-off gain from the closure of the defined benefit pension scheme.
Despite the challenges faced by the company, there was a 6% increase in sales across the Partnership. The John Lewis department stores chain and its associated webstore experienced strong sales growth of 12% compared to last year and 13% on a like-for-like basis. These figures were slightly up from 2019/20, with a 1% increase, and significantly higher on a like-for-like basis, with an 11% increase. Online sales accounted for almost 75% of total sales in the first half, compared to pre-pandemic levels of 40%.
The company noted that margins had rebounded strongly from the previous year, but were still subdued compared to 2019/20 due to higher sales in lower-margin categories and inflationary pressures in global freight pushing up costs. Technology sales remained flat year-on-year, while there was strong growth in home, fashion, and nursery categories.
The report also highlighted that customers were returning to stores for larger, more considered purchases, although not at the same levels as before the pandemic. Like-for-like sales compared to two years ago were around 20% lower during the period when the shops were open this year, with city centers being hit harder than retail parks and standalone stores.
In terms of Waitrose, the supermarket saw 2% sales growth (4% on a like-for-like basis) compared to last year, and a 10% increase in sales compared to 2019/20. The closer alignment between the two brands is notable, with all general merchandise sold in Waitrose being sourced by John Lewis in time for Christmas. The company plans to expand the number of dedicated John Lewis spaces in Waitrose stores to approximately 40 stores by the end of the year.
Looking ahead to the second half of the year, John Lewis Partnership has outlined several initiatives. These include extending its Anyday value line into adults’ and kids’ fashion, enhancing customer rewards through the relaunch of the MyJL app, and expanding the number of John Lewis spaces in Waitrose stores. The company also plans to open 10 new Christmas emporiums in John Lewis branches, offering customers a comprehensive seasonal shopping experience with in-store events and workshops.
Useful links:
1. https://www.johnlewispartnership.co.uk
2. https://waitrose.co.uk
