The John Lewis Partnership (JLP) has reported a deeper half-year loss, blaming new tax levies and higher national insurance costs for weighing on its finances despite an increase in sales.
Britain’s largest employee-owned business, which operates John Lewis department stores and Waitrose supermarkets, posted a headline loss before tax and exceptional items of £34 million in the six months to 26 July. That compares with a £5m loss in the same period last year, despite group sales rising 4% to £6.2 billion.
Impact of New Levies and Costs
The partnership said the steeper losses were largely due to costs not faced in the previous year. These included £29m for the new Extended Producer Responsibility (EPR) packaging levy, which was taken in full during the first half, and higher National Insurance Contributions (NICs).
The results also reflected additional investment in technology systems and growth-focused teams as part of the group’s ongoing turnaround plan. On a bottom-line basis, including exceptional costs and non-cash impairments, losses widened to £88m, up from £30m.
Investment Prioritised Over Bonuses
JLP said its focus remains on long-term recovery, with £191m invested during the six months to improve operations, stores, and customer service. That strategy has meant partner bonuses have once again been deprioritised as the company continues restructuring, which has already included store closures and job losses.
The group said it was confident of delivering profit growth in the crucial second half, traditionally boosted by the Christmas trading period.
Leadership Optimism
Chair Jason Tarry, the former Tesco executive who took over a year ago, struck an upbeat tone. He said both John Lewis and Waitrose were outperforming competitors in their markets and highlighted improved customer satisfaction.
“Our clear focus on accelerating investment in our customers and our brands is working: more customers are shopping with us, driving sales, and helping Waitrose and John Lewis outperform their markets,” Tarry said.
He added: “While we are reporting a loss in the first half, we’re well positioned to deliver full-year profit growth, which we’ll continue to invest in our customers and partners.”
Analysts’ Perspective
Market analysts suggested that part of the sales growth may have been helped by rivals’ difficulties. Marks & Spencer suffered a cyberattack in April, disrupting its operations.
However, consumer markets analyst Robyn Duffy of RSM UK said Waitrose had benefitted from a stronger food strategy, including price cuts and greater use of technology to enhance shopping.
“Meanwhile, the John Lewis retail arm is successfully drawing in customers through revitalised physical stores, meaningful brand partnerships, and the reintroduction of its Never Knowingly Undersold price matching strategy,” Duffy added.
