John Lewis Partnership warned on Thursday that its annual partner bonus could be at risk after hard-pressed consumers reined in spending, causing interim losses to widen.
The employee-owned group, which includes Waitrose, said interim pre-tax losses were £99m, compared to a pre-tax loss of £29m a year previously. Once exceptional costs were stripped out, the pre-tax loss was £92m, against a pre-tax profit a year earlier of £69m.
John Lewis attributed the loss in large part to the impact of soaring inflation on consumer spending.
Sharon White, chair, said: “We have more customers year-on-year in both brands, but they are spending less. Inflation has increased our costs, which means we have to do more to meet our original efficiency targets because we have not passed on all of the increased costs to customers.”
The group was also hit by the unwinding of pandemic trends, as discretionary spending shifted from big ticket household items to holidays and leisure.
White said the retailer was well-placed to navigate inflationary headwinds, with a strong balance sheet and loyal customers.
But she also warned that the firm was facing an “uniquely uncertain” outlook. “A successful Christmas is key for the business given the first half,” she said. “We will need a substantial strengthening of performance, beyond what we usually achieve in the second half, to generate sufficient profit to share a partnership bonus with partners.
“Much will depend on the wider economic outlook and consumer sentiment.”
John Lewis last scrapped the bonus in 2020, for the first time in its history, after being rocked by the pandemic. It was reinstated in the last financial year.
At the department stores, half-year sales rose 3% on both a like-for-like and total basis, to £2.1bn, with more people returning to shop in-store; the share of sales in shops averaged 41% in the half year, compared to 26% a year ago.
Waitrose saw sales fall 5%, also on both a like-for-like and total basis, to £3.6bn, however. Shoppers – no longer restricted by the pandemic and lockdowns – were now buying less on average, John Lewis said, with basket sizes down nearly a fifth.
Customer numbers were ahead 6% at Waitrose and 4% at John Lewis.
Inflation eased to 9.9% in August, from 10.1% a month previously, but remains close to historic 40-year highs.
