Inflation sends John Lewis to half-year loss
The John Lewis Partnership posted a half-year loss of £99m, or £92m before exceptional costs, after inflation prompted shoppers to tighten their belts.
It also said the loss reflected its decision to shield shoppers from some of its rising costs during the period and its decision to award full-time staff with a one-off £500 cost of living support payment.
The loss for the six months to the end of July compared to a £69m profit in the same period last year, although the partnership said it was “not unusual for us” to make a loss in the first half of the year” adding that it has done so in three of the last four years.
It said trading is heavily skewed to Christmas with most of its profits coming in the last quarter of the year.
The group, comprising department stores and the Waitrose supermarket chain, said inflation had “unprecedented cost inflation” across the business has not been totally passed on to customers.
Following the pandemic, customers have switched spending on “high margin, big ticket household items to restaurants and holidays – from dining room furniture to dining out.”
Operating profit was down by £93m to £432m, although customer numbers were up on the year before.
The partnership said the outlook for the rest of the year is highly uncertain owing to the cost of living crisis and its impact on discretionary spending.
John Lewis sales were up 13% like-for-like (up 4% in total). This has been driven by a return to shops. The share of sales in shops has averaged 41% for the half year, compared to 26% last half year, during the pandemic, and 60% before Covid. City Centre stores have come back most strongly with the return to more office working.
Fashion has been the best performing category, growing 25% compared to last year with strong performance in holiday wear, as people returned to travel and summer breaks. Conversely, our home and technology categories, which performed strongly during the pandemic, declined year-on-year.
Waitrose sales were £3.6bn, down 5% like-for-like on a year ago (down 5% in total); up 7% on a like-for-like basis on three years ago (up 4% in total).