Half-year profits recover at John Lewis

John Lewis Partnership PLC updates

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UK retailer John Lewis has reported that sales were still down by a fifth on pre-pandemic levels in the most recent half-year but it has returned to a profit before exceptional charges.

“Customers are returning to stores typically for larger, more considered purchases such as furniture and beds, and ‘take with you’ items like stationery and gifts, but so far not in the same numbers as before the pandemic,” said chair Dame Sharon White in a letter to the group’s staff.

However, growth at the department stores was strong overall in the six months to July 31, with sales up 12 per cent on the first half of last year and 1 per cent above pre-pandemic levels. Around 70 per cent of sales were online.

Margins also improved on last year, but are still below pre-pandemic levels.

The employee-owned group has closed 16 department stores during the past 18 months and thousands of jobs have been lost.

More roles are set to go in the coming months, with the business consulting on plans to close a distribution centre and reduce the number of managerial roles in stores, as supermarkets Asda, Tesco and Sainsbury have already done.

It has already pledged to cut a further £300m of costs to fund investment in its stores and digital capability.

The various retrenchments led to £98m of one-off costs against half-year profits, resulting in a £29m loss before tax — a significant improvement on the £635m loss incurred last year when the group took a big impairment charge against the value of its stores.

Before one-off items, profit was £69m against a £55m loss before impairments last year.

The group also said it was making good progress on co-operation between the department stores and Waitrose, its supermarket chain, and on introducing cheaper product ranges.

John Lewis has also revamped its financial services product ranges as part of a plan to source two-fifths of revenue from non-retail activities by 2025.