John Lewis profits to grow ‘significantly’ after torrid few years

The John Lewis Partnership has said it is on course to “significantly” grow profits this year after cutting losses in the first six months as it refocuses on its core retail business.
The employee-owned partnership behind the upmarket Waitrose grocery chain and John Lewis department stores said that total revenue rose 2 per cent to £5.2 billion in the period to July 27, helping losses before tax to fall from £59 million to £30 million year on year.
Stripping out exceptional items, losses fell from £57 million to £5 million.
Nish Kankiwala, chief executive of the John Lewis Partnership, said: “[The] 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.”
Kankiwala said that there was still “much more to do” but that the retailer was “well set up for a positive peak trading period” over Christmas.
Retailers such as the partnership traditionally generate a significantly higher proportion of profit in the second half of the year.
“We continue to invest heavily in quality, service and value and customers are responding well, with more people shopping with us and customer satisfaction increasing.”
The partnership is seeking to revive its fortunes after suffering mounting debts, falling profits and competition against online retailers and a resurgent Marks & Spencer.
Dame Sharon White, the partnership’s outgoing chairwoman, is due to hand over next week to Jason Tarry, the former Tesco UK boss, having sought to generate 40 per cent of its profits from non-retailing activities, such as house building and financial services, by the end of the decade.
A cost-cutting strategy focused on reducing staff, closing stores and streamlining operations was criticised for weakening the partnership’s prized customer service.
In March, shortly before the announcement of Tarry’s appointment, the partnership vowed to focus “unashamedly” on investing in its retail business after a controversial shift into housebuilding and three consecutive years of losses.
The partnership made a “pre-exceptional” pre-tax profit of £42 million in the year to January 7, but this compares to the £300 million-plus profits regularly reported less than a decade ago. This year partnership employees did not receive a bonus, only the third time that this has happened since 1953.
For the first half of this year, the partnership said that Waitrose outperformed the market, with sales up 5 per cent and adjusted operating profit growth of £75 million. But John Lewis sales were down 3 per cent “amidst a slower external environment for general merchandise”.
Last week John Lewis announced that it was reinstating its “never knowingly undersold” price-match promise to win back customers.
Store investment has been stepped up, and half a million more people shopped with the partnership, reaching 23.1 million customers. Investments in digital headsets have helped to connect customers to in-store staff quickly, improving service.
Last month Waitose announced plans to add an extra 100 convenience stores over the next five years in a £1 billion investment. It said that a quarter of its 320 stores would be revamped.
Despite the investments, it said that a further £78 million of savings had helped to deliver £500 million since January 2021, and that it remained on track to hit a target of £900 million by 2026.
It said the partnership’s financial position was “robust”, with total liquidity up £348 million year on year at £1.7 billion, including £1.3 billion of cash and short-term deposits. It plans to repay a £300 million bond due in January from the reserves.