The John Lewis Partnership has reported a significant narrowing in losses in the first half of the year as cost savings from its extensive restructuring programme began to take effect.
In the six months to 31 July, the owner of the Waitrose and John Lewis chains reported a pre-tax loss of £29m, impacted by property costs related to recent shop closures and redundancy expenses. However, the figure was a big improvement on the £635m loss in the same period last year, and before exceptional items, the group made a profit of £69m after generating savings of £66m and benefiting from business rates relief of £58m.
The Partnership’s total sale rose 6% to £5.87bn, despite high street lockdowns and the permanent closure of 16 department stores and several supermarkets. The group’s performance has been boosted by its significant investment in online shopping to meet surging demand.
Sales at Waitrose rose 2% (+4% like-for-like) to £3.79bn and were 10% higher than pre-pandemic levels after continuing to benefit from the closure of the hospitality sector earlier in the year and increases in its online capacity.
However, a combination of pandemic-related costs and growth of online has diluted the supermarket’s margins, which resulted in a 10% decline in trading operating profit to £61m.
Top sellers for Waitrose during the period included ready meals and food-to-go as people started to return to offices and looked for easy meal options. There was also strong demand for items such as flowers, champagne and sparkling wine as its customers continued to treat themselves at home.
Sales in the John Lewis department store business rose 12% (+13% like-for-like) to £2.08bn, with the strength of its online business offsetting lost trade from its shops being closed for 10 weeks in the first half and permanent closures. The stronger sales, better margins, and lower operating costs led to trading operating profit surging up 93% to £142m, back to 2019/20 levels.
Despite the improved underlying figures, Sharon White, the chairman of the John Lewis Partnership, remained cautious: “As we look ahead, there is significant uncertainty. Like the whole of retail, we are managing global supply chain challenges and labour shortages. We are seeing inflationary pressures, which we expect to persist.
“We are taking a raft of measures to mitigate these risks and deliver Christmas for our customers. These include a successful campaign to recruit drivers, offering competitive salaries and benefits, recruiting 7,000 temporary seasonal roles and booking additional freight to make sure John Lewis Christmas products arrive on time.”
She added: “Given the back-ended nature of our trading year, we do not generally provide an outlook. And this year we face additional uncertainty. Even with the success of the vaccination programme the course of the pandemic this winter is hard to call.”
