John Lewis has said its plan to return to profit will take two years longer after it reported further losses for the first half of the year.
The High Street giant, which also owns Waitrose, said rising business costs and larger than expected investment requirements meant that its recovery plan would not be finished until 2028. The group's pre-tax losses narrowed to £59m for the first half of 2023.
It said its modernisation plans would “take precedence” over its staff bonus. In 2020, John Lewis launched its “Partnership Plan” with the aim of returning a £400m profit by 2025-26, but said was now going to take until 2027-28 due to a “combination of inflationary pressures and greater than expected investment requirements”.
The department store has faced tough competition in recent years on the High Street, resulting in a series of store closures, while its supermarket chain Waitrose has underperformed Tesco and Aldi as shoppers hunt for cheaper food due to the higher cost of living.
For the first half of this year, Waitrose saw the value of sales rise by 4%, but the supermarket said this was driven by prices for its goods jumping 9% and the actual amount of products sold had actually fallen.
Customers at John Lewis department stores were spending “more on themselves”, the company said, with its sales in its beauty and fashion departments up, partly driven by new brands including JoJo Maman Bébé and Le Specs. But the group said shoppers were being “more cautious” over buying technology products and so-called big ticket items for their homes.
“It's been a case of more loafers and fewer sofas,” the retailer said. Dame Sharon White, chairwoman of John Lewis, told the BBC's Today programme that she was “very encouraged” by the group's latest results, with losses narrowing losses ahead of the peak Christmas trading period.
She said the “transformation for the partnership will take time”, but said the group's customers were showing a “vote of confidence” in its brands.
As part of its plans to modernise, the retailer has made savings of £31.2m so far this year and said it was on track to save more than £100m by the end of 2023. In March this year, John Lewis said it would not pay a staff bonus for only the second time since the scheme began in 1953, after a “very tough” 2022.
As well as each owning a stake in the business, John Lewis and Waitrose staff – referred to by the company as partners – have a say in the way it is run.
In May, employees backed Dame Sharon in a vote of confidence after she ruled out selling a stake in the business following speculation that a change to John Lewis's employee-owned structure was being considered.
— CutC by bbc.com
