John Lewis Partnership (JLP) is getting back on track its first-half results seemed to show on Thursday, as it appeared unperturbed by a wider loss that included a number of one-off items such as higher tax, investment costs and a packaging levy.
The six months to 26 July saw sales rising 4% to £6.2 billion as customer satisfaction reached a high and both the eponymous department stores and Waitrose supermarkets “outperformed their markets”.
Looking beyond the shock of much higher losses, its results statement did contain good news for the employee-owned company that just a few years ago seemed to be sabotaging its own operations by shedding experienced retail execs, looking for growth in areas wholly unconnected to retail and falling behind its peers in terms of tech and systems. That saw its previous good results being interrupted and staff (‘Partner’) bonuses being cancelled.
But new management with a strong background in retail seems to be turning things around.
The company said its results show “positive momentum as a direct result of our customer focused investments”. Those investments are designed to drive long-term, sustainable growth and in the first half it accelerated its investment in store upgrades, digital services and essential modernisation to its technology and supply chain.
As mentioned, the result was that 4% increase in group sales while total revenue grew 5% to £5.4 billion. Its customer numbers also rose 4% and it saw “pleasing growth” in its loyalty schemes.
JLP’s loss before tax and exceptional items was £33 million, with the figure significantly impacted by one-off costs that it hadn’t had to deal with a year earlier. On a like-for-like basis, that same loss was broadly flat compared to last year’s £4 million deficit and was partly driven by heavy investment designed to drive long-term growth.
With exceptional items included, the loss before tax was £87 million with £54 million of exceptional items relating to its ongoing transformation and non-cash asset impairments. A year ago that loss had been £29 million.
The net loss was £62 million, wider than the £19 million deficit of H1 2024, with Partner bonuses, tax and exceptional items denting the latest figure to the tune of £29 million.
The company expects the majority of its sales and profit to come in the second half and said its investments have been helping to build momentum over the first half.
Looking at its individual operations, Waitrose supermarket sales rose 6% to £4.1 billion with a 3% rise in volumes. Adjusted operating profit was £110 million.
Meanwhile John Lewis sales rose 2% to £2.1 billion. The company said it has attracted more customers through its commitment to operating quality, style and value, “which has resonated strongly”. The retailer has been investing heavily in John Lewis with big initiatives in both fashion and beauty, adding new fashion labels for instance and upgrading beauty spaces.
It undertook a major refurbishment of its Liverpool store, added more omnichannel shopping options including ‘deliver from store’ and rapid online delivery and the recent return of its 100-year-old Never Knowingly Undersold promise “has continued to drive sales, relevance and value for money perceptions”.
It said: “These investments and a renewed focus on compelling value, compounded by a sales mix shift towards Technology and Beauty, impacted gross margin in the short term.”
The adjusted operating loss was £53 million in the first half, down £4m, including incremental non-like-for-like taxation costs of £7 million from the new EPR packaging levy and incremental National Insurance Contributions.
It added that its first-half investment “allows us to look forward with confidence; our focus is now heading into peak where we see significant opportunity for all our core assortments”.
Chairman Jason Tarry said of all this: “Our clear focus on accelerating investment in our customers and our brands is working: more customers are shopping with us, driving sales, and helping Waitrose and John Lewis outperform their markets. We achieved our highest recorded levels of positive customer satisfaction.
“The investments we are making, combined with our plans for peak trading, provide a strong foundation for the remainder of the year. While we are reporting a loss in the first half, we’re well positioned to deliver full year profit growth, which we’ll continue to invest in our customers and Partners.”
