John Lewis Partnership said that it was on track to grow profits “significantly” this year, after recovering the “buzz”, and cutting losses while refocusing on its core business.
The employee-owned partnership that owns the Waitrose supermarket chain and John Lewis department store said the total revenue rose by 2 percent to £5.2 billion during the period ending July 27. Losses before tax also fell from £59 to £30 millions.
Losses dropped from £57 to £5 millions when exceptional items are removed.
Nish Kankiwala said that the results “confirm that our transformation plan works” and that John Lewis Partnership is “well-set up” for a successful peak trading period over Christmas.
After suffering from mounting debts and falling profits, as well as competition from online retailers such as Marks & Spencer and a resurgent Marks & Spencer, the partnership is reviving their fortunes.
Dame Sharon White will officially hand over the reins of the partnership on Monday to Jason Tarry. The former Tesco UK CEO has been working to increase profits in non-retail activities such as financial services and housebuilding.
The partnership was criticized for a cost-cutting plan that focused on closing stores, reducing the number of staff and streamlining its operations.
Jason Tarry will replace Sharon White as host next week
When the partnership announced a return of profit in March, it pledged to “unashamedly invest” in its retail business.
White did not make a statement in the results announcement on Thursday, but her bosses said that she “remains extremely supportive”.
The partnership, who made “pre-exceptional profits” of £42million in the year ending January 7, reiterated its profit target of £400million by 2027. This was delayed by two years by last September.
Kankiwala stated that the board will decide whether or not to pay a bonus in March. The staff did not receive any bonuses this year, only the third time in the past 53 years.
Waitrose led the recovery, with sales up 5 percent, volume up 2 percent, and adjusted operating profit at £113 million , up from £38 million last year. Gail’s Bakery was one of the new initiatives.
John Lewis’ sales fell by 3 percent due to “a slowing external environment” for general merchandise. It also made an operating loss of £49 million, up from £25 millions.
The “squeeze of customers’ disposable income” and “unseasonal weather”, as well as a lower demand for the “big ticket items”, weakened home sales.
John Lewis announced last week that it would reinstate its “never knowingly sold” promise of price matching in its 34 retail stores and online to compete with 25 other retailers, including Amazon and Next. The first week was “exceptional”, and bosses don’t expect “significant challenges” to the margins.
Waitrose announced plans last month to build 100 additional convenience stores in the next five-year period, with an investment of £1 billion. It announced that it would revamp a quarter (25%) of its 320 shops.
Savings have also helped the investments. A further £78m has helped deliver £500m since January 2021. The partnership stated that it was on track to reach its target of £900m by 2026.
Clive Black, retail expert at Shore Capital said: “It is pleasing to see that this British retail institution has emerged from the operating room. Customer service and satisfaction will be the key to success for us.
John Ralfe a pensions specialist, has warned of a £356m pensions deficit. He said that to plug the gap, deficit contributions, which were stopped last year, will need to be restarted in the near future. This would divert cash from JLP’s investment plans.
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