John Lewis Partnership reported a return to interim profit, but warned that global supply chain issues, labour shortages and inflationary pressures mean that it is facing “significant uncertainty” ahead.
The partnership achieved a pre-tax profit of £69mln before exceptionals in the first six months to end-July, compared with a loss of £55mln in the same period last year and a £52mln loss in pre-Covid 2019/20.
Profits were boosted by cost savings of £66mln and business rates relief of £58mln.
After exceptional costs of £98mln related to shop closures and redundancies, the group suffered an interim pre-tax loss of £29mln.
Sales at the group’s supermarket chain Waitrose grew by 2% (4% like-for-like) in the first half from last year and were 10% higher than the same period two years ago, driven by online growth.
Online sales now stand at 17%, up from 11% a year ago, but below 20% in March this year, the group said. Waitrose was the only supermarket in growth and was the fastest growing online supermarket since the pandemic began, according to figures from Kantar earlier this week.
Waitrose’s partnership with Deliveroo expanded from 40 to 150 shops in the first six months with a potential reach of up to 13mln customers. It is already generating sales of almost £1mln a week and attracting younger customers, the group said.
The John Lewis department stores also saw strong sales growth in the first half, with a rise of 12% on last year (like-for-like up 13%) and 1% on 2019/20 (like-for-like up 11%).
Almost 75% of sales were online, broadly the same as last year, and significantly up on pre-pandemic levels of 40%.
Margins also rebounded strongly against last year as the company returned to a more balanced pattern of trade, selling fewer laptops and more lamps and linen. Technology sales were flat year-on-year, while Home sales were up by 23%, Fashion by 22% and Nursery up 18%.
John Lewis said customers are returning to stores for larger items such as furniture and beds, and ‘take with you’ items like stationery and gifts, but not in the same numbers as before the pandemic.
For the period that its shops were open this year, like-for-like sales compared to two years ago were around 20% lower, with city centres impacted more than retail parks and standalone stores.
The group reported good progress towards making its two brands work closer together. All general merchandise sold in Waitrose will be sourced by John Lewis in time for Christmas. Some 17 Waitrose stores now have a dedicated, redesigned John Lewis space and that number will rise to around 40 by the year-end, it said.
The partnership said it has implemented a number of measures to mitigate against risks and prepare for the important Christmas period, such as a campaign to recruit drivers, offering competitive salaries and benefits, recruiting 7,000 temporary staff and booking additional freight to make sure John Lewis Christmas products arrive on time.