John Lewis Partnership Plc has pushed back its plan to be profitable by two years as stubbornly high inflation and weak online sales complicate the department store chain’s turnaround effort.
The retailer, which also owns upmarket grocer Waitrose, said additional cost hikes and extra investment meant it would remain loss-making until 2028.
The ongoing losses underline how far John Lewis has to go with its turnaround plan which has been under way since Chairman Sharon White took charge in 2020. The overhaul has involved shutting stores, reducing staff and diversifying into real estate and financial services.
Earlier this year the retailer was forced to cancel staff bonuses for the second time in three years and warned of job cuts. It said Thursday that modernizing the business, improving customer service and pay rises would take precedence over paying a bonus.
However, John Lewis narrowed first-half losses before tax by 43%, to £56.2 million ($65.4 million), according to an earnings statement. The company, which is owned by its employees, saw overall sales rise 2%.
While in-person sales at John Lewis department stores improved by 2%, online sales fell 4%. It said customers were more cautious about big-ticket items, spending less on home and technology, and more on fashion and beauty.
Waitrose volumes fell 5% in the first half as it was hit by tough competition and did not cut prices as quickly as some rivals. An IT incident which affected the grocer’s supply chain reduced profit in the half by nearly £12 million. Waitrose said volumes are starting to recover as the second half progresses.
--With assistance from Katie Linsell.
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