John Lewis swings to H1 loss of £99m

John Lewis has swung to a loss of £99m for the first half of 2022 (H1 FY22) which it attributed to a reduction in customer spending and an increase in inflation-induced costs, which have not fully been passed onto customers.

Overall, Waitrose sales dropped 5% year-on-year to £3.6bn for the 26 weeks ended 30 July 2022. Waitrose Trading operating profit also fell by £93m to £432m due to a combination of volume decline and inflationary pressures being partially offset by a more favourable profit mix and cost savings.

Meanwhile, John Lewis sales grew 3% year-on-year to £2.1bn, and operating profit has been maintained at £295m compared to last year.

The share of sales in shops has averaged 41% for H1 FY22, compared to 26% in H1 FY21, and city centre stores have come back “most strongly” with the return to more office working.

Fashion has been the best performing category, growing 25% year-on-year, particularly in holiday wear as people returned to travel and summer breaks. John Lewis’ value own-brand, Anyday, saw sales rise 28%, and energy saving items also attracted higher demand – air fryer sales are up 56% and smart thermostats up 8%.

Half a million more people are now shopping with John Lewis than a year ago, with total customer numbers at 12.2 million which is up 4% year-on-year, and total customer numbers for Waitrose are 13.4 million, up 6% year-on-year.

John Lewis said it is not unusual for the company to make a loss in the first half of the year as its trading is heavily skewed to Christmas with most of its profits coming in the last quarter of the year.

The group’s outlook for the rest of the year is “highly uncertain” due to the cost of living crisis and its impact on discretionary spending. John Lewis added that it will need a substantial strengthening of performance, beyond what it usually achieves in H2, to generate sufficient profit to share a Partnership Bonus with partners.

Sharon White, partner and chairman of John Lewis, said: “We are responding to the cost of living crisis by supporting those who need it and by stepping up our efficiency programme. We are forgoing profit by making choices based on the sort of business we are, led by our Purpose – ‘Working in Partnership for a happier world’ – by helping our partners, customers, communities and suppliers.”