Inflation hits John Lewis transformation timetable however half-year losses ease

The John Lewis Partnership (JLP) has revealed its transformation plan will take two extra years to finish than anticipated, whereas revealing a drop in losses over the primary half of its monetary yr.

The employee-owned firm, by which workers are referred to as companions, mentioned {that a} mixture of upper prices as a result of inflation and a necessity for higher funding had hit its turnaround timetable.

It was initially scheduled to have been accomplished within the 2025/26 monetary yr and ship higher productiveness and effectivity to spice up earnings following years of disappointing monetary efficiency.

The troubles have knocked its well-known annual bonuses to companions, with workers getting nothing final yr.

The partnership, which contains the eponymous John Lewis malls and Waitrose supermarkets, reported a backside line loss earlier than tax of £56.2m between February and July.

That was a 43% enchancment on the £99.2m sum in the identical six-month interval final yr.

The group reported a 2% enhance in gross sales throughout the partnership to £5.8bn.

It credited demand for its magnificence and trend traces in John Lewis however mentioned gross sales in expertise and “big ticket home items” remained subdued given the evolving value of residing disaster.

Waitrose gross sales have been up 4% to £3.7bn.

John Lewis had launched its 5 yr Partnership Plan in 2020.

It focused a return to earnings of £400m by means of measures to this point which have included job losses however has proved extra tough to ship within the powerful financial local weather given hovering extra prices – £179m alone final yr.

The partnership mentioned on Thursday that reaching its technique would take priority over bonus funds, which weren’t paid for the final monetary yr.

At the identical time, it forecast an enchancment in its annual outcomes for the 12 months to the top of January.

“While the economic outlook and consumer sentiment remain uncertain, on the back of stronger Waitrose trading and further efficiency savings in the second half, we expect an improved full-year financial performance,” the corporate mentioned.

“We typically make most of our profit in the last three months of the year, so a successful peak is always critical.”

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Partnership chairwoman, Dame Sharon White, added: “The partnership is a unique model that has been tested and come through stronger many times in our 100 year history.

“While change is rarely straightforward, and there’s a lengthy street forward, there are causes for optimism.

“Performance is improving. More customers are shopping with us. Trust in the brands and support for the partnership model remain high.”

But Zoe Mills, lead retail analyst at GlobalData, mentioned the corporate’s replace was a transparent setback.

“John Lewis & Partners has succumbed to the pressures of the cost of living crisis, as the mid-market player struggled to retain appeal in a retail market plagued by consumers seeking low prices,” she wrote.