John Lewis’s full-year loss has widened after sales fell and the UK retailer failed to slash costs, pushing the group to waive its staff bonus and warn of further job cuts.
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 those at supermarket Waitrose, which accounted for £7bn of the total, down 3 per cent.
“Inflation has hit us like a hurricane,” said chair Dame Sharon White, 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 74,000 staff. Last year the bonus was 3 per cent of employee salaries.
The group said inflation added £179mn to its costs, while lowering the price of hundreds of goods in Waitrose cost it £100mn.
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. On Thursday it raised its cost-cutting target from £300mn to £900mn by 2026.
John Lewis has permanently closed 16 stores and made thousands of staff redundant since the start of the pandemic, in an effort to bring down costs and reduce its debt burden.
White said further job cuts are expected but declined to give a number. “We are expecting the [restructuring] to have partner implications,” she said.
She added: “We’re accelerating our [restructuring] plan and have a clear pathway to profit. We aim to convert our £12bn in sales into sufficient sustainable profits to reinvest and reward our partners.”
Clive Black, of Shore Capital, said 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 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.
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 were buying less in the upmarket grocer.
