John Lewis’s full-year loss has widened after sales fell and the UK retailer failed to cut costs, pushing the group to waive its staff bonus for the second time in its history.
The UK retailer reported a pre-tax loss, including property writedowns, of £234mn in the year to January 28 — in contrast to a £27mn loss the previous year. Sales fell 2 per cent to £12bn with sales at supermarket Waitrose, which accounted for £7bn of the total, down 3 per cent.
Chair Dame Sharon White said that inflation had increased costs by £180mn in a letter to the group’s staff, known as partners, adding that the cost of living crisis had pushed some of its customers towards discount supermarkets.
John Lewis is the UK’s largest employee-owned company and shares profits among its staff. Last year the bonus was 3 per cent of employee salaries.
The pre-tax loss, the second biggest in John Lewis’ history, poses a challenge for incoming chief executive Nish Kankiwala who is continuing with the group’s restructuring plan. The former Hovis boss is the partnership’s first CEO.
The group embarked on a five-year plan in 2021 to restructure the business, cut costs, improve profit margins and invest in its stores, with an increased target for efficiency savings from £300mn to £900mn by 2026.
Although some customers had left Waitrose for discount supermarkets such as Lidl and Aldi according to White, the grocer’s total customers were up 7 per cent to 13.7mn, with total partnership customers up 4 per cent to 20.3mn. However people “bought less”, White said, adding that the “big online growth of the pandemic years was partly reversed”.
Clive Black, of Shore Capital, said that John Lewis “has gone from being quite profitable to quite lossmaking”, adding that Waitrose had lost about 0.3 per cent of market share, taking it to 4.7 per cent of the grocery market.
Josh Holmes, a senior consultant at Retail Economics, said that the results were “worse than expected, with both Waitrose and John Lewis seeing profits retrench as inflation sends costs spiralling”.
“The company has tripled its target for cost savings, but this raises genuine concerns over the impact on innovation and investment in its customer proposition,” he added.
