John Lewis has reported a drop of £234m, the group’s second ever full-year loss as management struggles to turn the company around.
Sharon White, chairman of the John Lewis Partnership, said: “The mantra for the year is cost out, margins up and customer focus.”
The chairman confirmed that John Lewis and Waitrose staff will not receive a bonus this year as the retail group fell £234m into the red. This decrease is worse than had been expected, with the group making a pre-tax loss of £78m, compared with analysts’ expectations of £50m. Write-downs of the value of Waitrose stores after poor trading have exacerbated the loss.
Staff bonuses have always been one of the attractions of working for the partnership; in some years, they have been as high as 24% of salary, an amount that was paid in 1979, 1987 and 1988. Last year the bonus was 3% of salary.
Sharon White warned of job losses and said profits had been hit by a £180m rise in costs driven by higher commodity prices, energy bills and staff wages. Speaking to the Evening Standard, she said: “Inflation hit us like a hurricane, but customers are staying loyal to us.”
Sales for the group fell 2% to £12.25b as strong sales at John Lewis department stores only partly offset a 3% fall in sales at Waitrose.
Sharon White said the group was responding to its difficulties by increasing its target for cost savings threefold to £900m by January 2026, and would be focusing on margins and customer service as well as costs.
She added that the balance sheet remains strong and remains confident that, although there are concerns about the future of the retailer, her transformation plans will “secure the partnership’s future for another 100 years”.
The figures were published a day after the parent group of John Lewis and Waitrose appointed Nish Kankiwala as group chief executive, to help the ongoing process of reinventing the business. The group said he will drive performance and profitability day to day, while Sharon White focuses on wider strategic moves.