John Lewis Partnership, which comprises department store chain John Lewis and supermarket Waitrose, expects its turnaround strategy to be delayed by two years despite narrowing losses in the first half of the year.
In the six months to July 29, the employee-owned company made a loss before tax and exceptional items of 57.3 million pounds from a loss of 66.8 million pounds a year earlier, while its pre-tax loss narrowed to 59 million pounds from 99.2 million pounds.
That came as total partnership sales increased 2 percent to 5.8 billion pounds in the first half, with Waitrose sales up 4 percent to 3.7 billion pounds, but John Lewis sales falling 2 percent to 2.1 billion pounds.
Customers at John Lewis “continued to spend on themselves” in the first half, with fashion and beauty up 3 percent and 2 percent, respectively. That growth was partly driven by the introduction of new brands, including JoJo Maman Bébé and Le Specs, the company said.
However, that growth was offset by shoppers reigning in their spending on ‘big ticket' items across home and tech, which were down 5 percent and 4 percent, respectively.
JLP turnaround delayed
The latest financial update comes as the John Lewis Partnership continues to push forward with its major turnaround strategy launched in 2020, with an aim to reach profits of 400 million pounds by 2025.
However, various factors continue to stand in the way of that goal, including inflationary and investment costs, meaning the turnaround is now not expected to be completed until 2027/28.
“Those two factors mean the plan will take a couple of years longer to get us back to the sort of profit levels that we'll be happy with,” John Lewis Partnership chair Sharon White told reporters, Reuters reports.
In a statement in the first-half results, she said the company is in a “unique model that has been tested and come through stronger many times in our 100 year history”.
She continued: “While change is never easy - and there is a long road ahead - there are reasons for optimism. Performance is improving. More customers are shopping with us. Trust in the brands and support for the Partnership model remain high.”
Looking ahead, the company said it expects an improved full-year financial performance compared to a 77.6 million pre-tax loss last year.
“We typically make most of our profit in the last three months of the year so a successful peak is always critical,” it said.