// John Lewis Partnership swings to underlying pre-tax loss of £25.9m in half-year report
// This compares to a profit of £800,000 last year
// Partnership also warns a no-deal Brexit could have a “significant” impact it cannot offset
John Lewis Partnership has swung to a loss in its half-year report, in which it also warned that a no-deal Brexit could lead to “significant” impacts it would not be able to offset.
For the six-month period to July 27, the parent company of Waitrose and the eponymous department store saw underlying pre-tax loss come in at £25.9 million, compared to profits of £800,000 this time last year.
The marked the partnership’s first-ever half-year loss.
Overall half-year revenue also took a hit, declining 1.4 per cent year-on-year to £4.78 billion.
The partnership said that while most of its annual profits are made in the second half of the year, it warned trading conditions had been “difficult” and expects it to remain challenging for the rest of the year.
It added that a no-deal Brexit outcome would have a “significant” impact on the business, which it cannot offset.
“Should the UK leave the EU without a deal, we expect the effect to be significant and it will not be possible to mitigate that impact,” said Sir Charlie Mayfield, the outgoing chairman of the John Lewis Partnership.
He added: “Brexit continues to weigh on consumer sentiment at a crucial time for the sector as we enter the peak trading period.”
He added that the the partnership had tried to improve its financial resilience by increasing foreign currency hedging, stockpiling some goods as well as improving “customes readiness”.
The partnership has also reduced its debt – it’s now down 16.4 per cent year-on-year to £2.38 billion.
The company said its half-year losses were driven by widened operating losses at John Lewis, which increased to £61.8 million from £19.3 million a year ago as it suffered falling sales, surging costs of an IT overhaul and increasing cost inflation.
Like-for-like sales fell 2.3 per cent across the department stores.
Waitrose performed better, with underlying earnings increasing 14.7 per cent to £110.1 million, though like-for-like sales slipped 0.4 per cent year-on-year.
On a statutory basis, the partnership’s pre-tax profits jumped to £191.5 million from £6 million a year earlier.
However, this included one-off items and were flattered by accounting changes.