John Lewis & Partners has plunged to a record £517m annual loss and warned of further store closures after enduring “one of the most challenging years” in its history.
The full-year figures, published by the retailer on Thursday, were hit by £648m of exceptional costs primarily associated with writedowns in the value of its shops after Covid-19 saw customers shift away from bricks and mortar in favour of online shopping.
As a result, the pre-tax loss for the year to 30 January 2021 came in at £517m against a pre-tax profit of £146m a year previously.
Stripping out the one-off charges, which also included restructuring and redundancy costs, pre-tax profits were £131m, an improvement on the previous year’s £70m. However, the retailer said it would have swung to a loss had it not been for £190m of government support.
Total trading sales were ahead 5% at £12.3bn, while revenues came in 6% higher at £10.8bn. The improved sales were led by supermarket chain Waitrose, which saw trading operating profits rise to £1.15bn from £1.06bn a year earlier.
The John Lewis department stores, however, saw operating profits slide to £554m from £734m.
Chairman Sharon White said: “The past year has been one of the most challenging in the partnership’s history.
“We are having to take very difficult decisions to return the business to a path of sufficient profit of £400m by 2025/26. Last year we closed eight John Lewis stores and seven Waitrose stores that were loss making, and we are in the process of reducing the cost of our head office by 20%.”
Looking ahead, she added: “The outlook is uniquely uncertain as the country charts its exit from lockdown.
“Hard as it is, there is no getting away from the fact that some areas can no longer profitably sustain a John Lewis store. Regrettably, we do not expect to reopen all our John Lewis shops at the end of lockdown, which will also have implications for our supply chain. We are currently in discussions with landlords and final decisions are expected at the end of March.”
The partnership, which is targeting £300m of cost reduction by 2022/23, plans to invest £800m in the current year to support its turnaround. Partnership bonuses will not resume until pre-tax profits before exceptions reach £150m on a sustainable basis and the debt ratio is below four times.
