// John Lewis swings to £99m loss after “unprecedented cost inflation across grocery and general merchandise”
// In response to inflation, John Lewis will offer colleagues free food over the 14 weeks of winter
John Lewis Partnership swung to a £99 million loss in its first half as “unprecedented cost inflation” across grocery and general merchandise took its toll.
This time last year, the retail group made a £69 million profit.
Although John Lewis sales were up 3% at £2.1 billion in the 26 weeks to 30 July, Waitrose like-for-like sales dropped by 5%, and its operating profit fell by £93 million due to inflationary pressures.
Waitrose basket sizes, which had been artificially inflated during the pandemic, had plummeted by nearly a fifth as inflationary pressures impacted customers’ shopping decisions.
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In response to soaring inflation, John Lewis Partnership will pay its full-time staff a one-off cost-of-living support payment of £500.
This is on top of its giving partners free food over the 14 weeks of winter.
John Lewis said its partners are “the lifeblood of the business” and had doubled financial assistance to £800,000 for those facing hardship.
John Lewis Partnership chair Dame Sharon White said: “We are forgoing profit by making choices based on the sort of business we are, led by our purpose – ‘Working in Partnership for a happier world’ – by helping our partners, customers, communities and suppliers.”
John Lewis is also increasing the entry level pay for partners by 4%, costing £10 million in the second half. It said it would invest £45 million in helping its partners this year.
Department store sales hold up
John Lewis sales increase over the half were driven by a return to shops with operating profit maintained at £295 million compared to last year.
Fashion was the best performing category, growing 25% compared to last year with strong performance in holiday wear.
Meanwhile, the group’s value own brand Anyday saw sales rise 28% on last half year after customers had growing concerns about inflation.
The department store chain recorded a 4% year-on-year rise in total customer numbers to 12.2 million over the period.
John Lewis Partnership said the outlook for the rest of the year is “highly uncertain” owing to the cost-of-living crisis and its impact on discretionary spending, particularly over Christmas.
2 Comments. Leave new
On thing is certain that Waitrose (the real generator of JLP profits) is in danger of losing market share with the growth of the two European discounters who will have developed a strong festive package making Waitrose very expensive and with no USP. Expect higher JLP losses.
With John Lewis suffering a loss it shows how the cost of living crisis is impacting big brands. And things could get worse with disposable income is set to fall by 10 per cent and already the cost-of-living crisis is altering consumer behaviour with a research report by the DMA showing that across all categories almost all consumers have made changes or are planning to make changes to their spending habits. For every sector this is bad news. Cost of acquisition and retention will soar. Consequently, it makes sense to target customers who have a higher propensity to spend. Home movers are now one of the most valuable consumer groups offering a £29 bn lifeline to a frail economy. Our data shows that the property market is defying all odds and continues to run hot with 10 per cent more households saying they want to move house in comparison to in April. In July 402,011 households were considering a house move despite the rising interest rates and continued high property prices. Targeting home movers should be a priority for brands whilst the market remains strong.
Colin Bradshaw