John Lewis Partnership blames losses on packaging tax and rising costs as sales rise

The John Lewis Partnership has reported deepening half year losses, attributing the downturn to surging employment costs and a substantial £29 million impact from the newly introduced packaging tax. Stripping out exceptional items, pre-tax losses widened to £34 million for the six months to 26 July, up from £5 million during the same period last year. This performance comes despite a 6 per cent rise in sales to £6.2 billion, underscoring the challenge of balancing growth against mounting costs.

Higher employers’ national insurance contributions introduced in April, along with new extended producer responsibility rules targeting packaging—particularly glass—have weighed heavily on the employee-owned retail group. Including restructuring charges and additional regulatory expenses, reported losses reached £88 million in the first half. The group owns both Waitrose supermarkets and John Lewis department stores, two of the UK’s leading retail brands.

Chairman Jason Tarry, who joined the group last September, maintained an optimistic outlook. He noted increased footfall and sales, with Waitrose recording revenues of more than £4 billion for the first time, a 6 per cent increase year on year. John Lewis retail sales rose by 2 per cent to £2.1 billion over the same period, with customer numbers strengthening across both brands. Tarry highlighted ongoing investment in technology, supply chain, and physical stores as key to driving this momentum.

John Lewis traditionally generates the bulk of its profits in the second half of the year, with the critical Christmas period still to come. Investment for the first half stood at £191 million, with further increases expected as the business looks to cement its revival. A new partnership with Topshop is scheduled to launch in 32 John Lewis stores from February, a move designed to appeal to younger shoppers and re-engage the millennial market.

Despite its challenges, the John Lewis Partnership remains committed to its employee-owned ethos, even as it adapts to an evolving retail landscape. The wider turnaround plan is focused on reviving retail roots, enhancing customer service, and boosting the in-store experience. Early signs of progress are emerging; in July, John Lewis overtook Marks & Spencer as the UK’s top-rated retailer for customer satisfaction. The next six months will be pivotal in determining if the partnership can convert these early gains into sustainable profits while remaining true to its founding values.