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Retail

Waitrose Parent John Lewis Sinks To Loss As Cost-Of-Living Crisis Weighs

Britain's John Lewis Partnership reported a loss for the first half of the year and warned that the outlook for the rest of 2022 was highly uncertain due to the impact of the cost-of-living crisis on discretionary spending.

The employee-owned group, which runs John Lewis department stores and the upmarket Waitrose supermarket chain, on Thursday logged a loss before tax and exceptional items of £92 million (€106.1 million) in the six months to 30 July. That compares with a profit of £69 million (€79.5 million) in the same period last year.

It said that while department store sales were up 3% on a like-for-like basis to £2.1 billion, Waitrose sales dropped 5% to £3.6 billion (€4.2 billion).

UK shoppers are seeking savings in the face of soaring inflation, which was 9.9% in August and is expected to rise further this year.

Last week industry data showed the slowest growth in retail sales since the end of COVID-19 lockdowns last year.

Customer numbers at Waitrose & Partners held up with transactions, registering an increasing of 14% year-on-year in the first half, but basket sizes reduced by nearly a fifth.

Online shopping accounted for 15% of the upmarket retailer's sales, with significant growth compared with the period before the pandemic and 5% below the pandemic peak of around 20%.

In the first half, nearly seven in ten baskets included a product from the Essential range. Total customer numbers increased by 6% year on year to 13.4 million.

Profit Warning

UK fashion retailers Primark, ASOS and online supermarket Ocado Retail, have all warned on profit this month.

The partnership attributed the loss to higher costs not being fully passed on to customers, the slide in demand, the unwinding of pandemic shopping patterns as well as greater investment in the business.

Despite the loss, the partnership did announce a one-off cost-of-living support payment of £500 for full-time employees known as 'partners'.

Sharon White, a former Treasury official who chairs the partnership, said a successful Christmas would now be key for the business.

"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," she said.

With the partnership hit hard by the pandemic, White set out a five-year recovery plan in October 2020 that included store closures and job cuts but also investment in its online operations.

News by Reuters, additional reporting by ESM – your source for the latest retail news. Click subscribe to sign up to ESM: European Supermarket Magazine.

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