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The group said while the consumer and economic backdrop was ‘uncertain’, it was confident of a marked improvement in underlying profits at the full-year stage
Image: PA Wire/PA Images)
The John Lewis Partnership has reported a significant reduction in half-year losses and anticipates “significantly” higher annual profits as its restructuring efforts start to pay off.
The owner of the renowned department store chain and Waitrose supermarkets, the employee-owned group, announced pre-tax losses of £30m for the six months leading up to July 27, which is nearly half the £59m loss from the previous year. While the John Lewis stores experienced a slight dip in sales by 3% to £2bn, their supermarket counterpart Waitrose enjoyed a robust 5% increase in sales, with average prices climbing just over 2%.
The partnership’s financial position was further bolstered by slashing £78m in costs, resulting in 300 job cuts across the company in the first half of the year. Despite the uncertain consumer and economic climate, the group remains optimistic about a substantial uplift in underlying profits by the end of the year.
However, there’s still no word on whether the traditional staff bonus will make a comeback after a two-year gap. Nish Kankiwala, chief executive of the John Lewis Partnership, said that a decision regarding the staff bonus would be made in March next year.
John Lewis highlighted: “We have historically delivered the majority of our profits in the second half of the year. Despite the environment for our customers remaining uncertain, we expect to maintain financial momentum from consistent delivery of our multi-year transformation.”
“As a result, we are confident that full-year pre-exceptional profits should be significantly above the £42 million we reported in 2023-24.”
Mr Kankiwala said that the “buzz is back at John Lewis”. “These results confirm that our transformation plan is working and we expect profits to grow significantly for the full year, a marked improvement from where we were two years ago,” he continued.
The group has been spearheading an overhaul to reduce costs, announcing in August that it was eliminating 153 jobs at the department store business as part of a revamp of its store teams to enhance customer service. The company stated that more than half of the overall 300 roles that have been cut were through voluntary redundancies.
Mr Kankiwala revealed that the group was not planning significant job cuts over the second half of the year, but was continuing to trim its workforce, primarily through staff attrition not replacing some workers when they leave.
He said: We have been very clear that as we go through this transformation there will be fewer roles in the partnership. On the whole we’re managing headcount through (staff) attrition and redeployment.”
This week, John Lewis reinstated its “never knowingly undersold” price pledge in a significant U-turn after abandoning the commitment two years ago due to concerns it was less relevant to shoppers. The partnership is gearing up to launch over 100 new convenience stores in the next three to four years, with a hefty investment plan of £500 million for 2024-25, marking a 53% increase from the previous year.
Mr Kankiwala has observed that consumer spending remains strong in the Waitrose chain and across sectors like beauty, technology, and home accessories, though he notes that big-ticket items are feeling the pinch due to cost-of-living concerns.
“It’s fair to say that large home items are impacted by cost-of-living sentiment,” he commented. These developments come as the partnership anticipates the arrival of former Tesco UK chief Jason Tarry next week. He’s set to step into the role of chairman, succeeding Dame Sharon White, who will be stepping down at the end of this year.
