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John Lewis Partnership make a £92m loss

John Lewis

In the 26 weeks ended 30 July, JLP made a loss before tax and exceptional items of £92m, compared to a profit of £69m in the same period last year and a loss of £52m three years prior (i.e. the last pre-Covid half).

The loss was largely due to two main factors:

  • Inflation has affected consumer spending. JLP has more customers year-on-year in both brands (up 6% in Waitrose and 4% in John Lewis) but they are spending less and inflation has increased costs
  • Post-pandemic customer trends: in-store spending rebounded compared to last year. Online remains elevated compared to pre-pandemic levels. Customers have moved their discretionary spending from high margin, big ticket household items to restaurants and holidays – from dining room furniture to dining out.

Waitrose performance

  • 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). During the pandemic, Waitrose benefited from bigger baskets as customers were restricted by the pandemic, dining out less and doing fewer shops.
  • Customer numbers have held up, transactions were up 14% year-on-year, but basket sizes are smaller by nearly a fifth. Online shopping continues to be important, accounting for 15% of sales; significantly up on before the pandemic and 5% below the pandemic peak of around 20%. Nearly seven in ten baskets include a product from the Essential range. Total customer numbers are 13.4 million, up 6% year-on-year.
  • Waitrose Trading operating profit fell by £93m to £432m due to a combination of volume decline and inflationary pressures being partially offset by a more favourable profit mix and cost savings.

John Lewis

  • John Lewis sales were £2.1bn, up 3% like-for-like on last year (up 3% in total). Against three years ago, 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.
  • The impact of the cost of living – and specifically growing concerns about inflation and energy costs – is evident in patterns of spending. ANYDAY – our great value own-brand – saw sales rise 28% on last half year. Energy saving items also attracted high demand – air fryers up 56%; smart thermostats up 8%. Customer numbers have been strong, with half a million more people shopping with John Lewis than a year ago. Total customer numbers are 12.2 million, up 4% year-on-year.
  • John Lewis Trading operating profit has been maintained at £295m compared to last year.

RESPONSE TO THE COST OF LIVING CRISIS

Partners

  • Doubled (to £800,000) financial assistance for Partners facing hardship. We are making an active choice to spend £45m to help our Partners, in addition to the April 2022 pay increase and Bonus:
  • Free food at work for 14 weeks over winter;
  • One-off cost of living payment to Partners equal to £500 per full-time Partner (pro-rated for part-time Partners)
  • Increasing the entry level pay for Partners by 4%, costing £10m in the second half.

Customers:

  • Over 95% of school uniform items have had a price freeze or reduction this year, conscious that these are an essential item.
  • In John Lewis, following the retirement of ‘Never Knowingly Undersold’, investing £500m into prices
  • Improved point of sale credit for big ticket items
  • Testing a new loans product through our financial services arm.
  • Customers benefited from £46m in money-off vouchers through the MyWaitrose loyalty scheme
  • Just refreshed our My John Lewis loyalty programme.

Suppliers:

  • Investing £16m in British pig farmers to ensure not just their survival but their ability to continue to meet high animal welfare standards.
  • Donated more than £2m to charities to help families through challenging times, and provided the equivalent of 2.8 million meals through FareShare.

Investing in brands:

  • John Lewis relaunched earlier this month for ‘All Life’s Moments’ alongside a complete refresh of main John Lewis & Partners mid-tier brand
  • Waitrose relaunches soon “with an even sharper focus on quality, service and sustainability”
  • The rollout of the John Lewis ‘shop within a Waitrose shop’ continues – expanding from 49 currently to 88 stores by the end of the year
  • The trial of a new concept John Lewis format launches early in 2023
  • New partnership with Dobbies and an expanded partnership with Deliveroo are taking Waitrose to new customers
  • In financial services, JLP are trialling a new loan product and relaunched their pet insurance product. Plans to develop rental homes (‘build to rent’) are taking shape

OUTLOOK

  • “The outlook is uniquely uncertain. We believe we are well placed to navigate the current inflationary headwinds. First, we have a strong balance sheet, which helps us navigate through trading volatility with total liquidity at £1.5bn (cash of £1.1bn and facilities of £0.4bn). Second, the loyalty of our customers and a deep understanding of their changing habits and needs. Third, the dedication of our Partners who provide great service for our customers”.

 

READ THE FULL RELEASE

 


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