John Lewis set for ‘significantly’ higher annual profits as overhaul pays off

The John Lewis Partnership has revealed sharply narrowed half-year losses and said annual profits would be “significantly” higher as its overhaul starts to bear fruit.

The employee-owned group, which runs the department store chain and Waitrose supermarket arm, reported pre-tax losses of £30 million for the six months to July 27, down 49% on the £59 million reported a year earlier.

The John Lewis department store business saw half-year sales fall 3% to £2 billion, but Waitrose notched up 5% sales growth as average prices rose just over 2%.

Its losses were also boosted as the group stripped out £78 million in costs, revealing that 300 jobs across the group were axed in the first half.

The group said while the consumer and economic backdrop was “uncertain”, it was confident of a marked improvement in underlying profits at the full-year stage.

But it gave no indication over whether it would reinstate its annual staff bonus, which has not been handed out for two years running.

Nish Kankiwala, chief executive of the John Lewis Partnership, told the PA news agency the group would make a decision on the staff bonus in March next year.

John Lewis said: “We have historically delivered the majority of our profits in the second half of the year.

“Despite the environment for our customers remaining uncertain, we expect to maintain financial momentum from consistent delivery of our multi-year transformation.

“As a result, we are confident that full-year pre-exceptional profits should be significantly above the £42 million we reported in 2023-24.”

Mr Kankiwala said the “buzz is back at John Lewis”.

“These results confirm that our transformation plan is working and we expect profits to grow significantly for the full year, a marked improvement from where we were two years ago,” he added.

The group has been leading an overhaul to strip out costs, revealing in August that it was cutting 153 jobs at the department store business as part of a shake-up of its store teams to improve customer service.

The firm said more than half of the 300 roles overall that have been cut were through voluntary redundancies.

Mr Kankiwala said the group was not planning major job cuts over the second half of the year, but was continuing to pare back its workforce, largely through staff attrition – not replacing some workers when they leave.

He told PA: “We have been very clear that as we go through this transformation there will be fewer roles in the partnership.

“On the whole we’re managing headcount through (staff) attrition and redeployment.”

This week, John Lewis brought back its “never knowingly undersold” price pledge in a major U-turn after ditching the commitment two years ago over concerns it was less relevant to shoppers.

Mr Kankiwala added that the first week of the pledge had been “exceptional” and that it had already driven tens of thousands of new visitors to the John Lewis website.

John Lewis also said it will open a Waterstones branch inside its Oxford Street store, with more expected in the coming weeks.

The partnership is also opening more than another 100 Waitrose convenience stores over the next three or four years as part of plans to invest £500 million over 2024-25, up 53% year-on-year.

Mr Kankiwala said consumer spending was robust in its Waitrose chain and across beauty, technology and home accessories, but remains under pressure for large purchases.

“It’s fair to say that large home items are impacted by cost-of-living sentiment,” he said.

The results come as former Tesco UK boss Jason Tarry prepares to join the partnership next week ahead of taking over as the next chairman, replacing Dame Sharon White, who is due to leave at the end of the year.