John Lewis’ full-year losses widened after sales fell and the UK retailer failed to cut costs, forcing the group to waive its staff bonuses for the second time in its history.
The UK retailer reported a pre-tax loss, including property write-downs, of £234mn in the year to January 28 – compared to a loss of £27mn the previous year. Sales at supermarket Waitrose fell 2 per cent to £12bn, for a total of £7bn, down 3 per cent.
Chair Dame Sharon White said inflation had increased costs by £180mn in a letter to staff at the group, known as Partners, adding that life crisis costs had pushed some of its customers to discount supermarkets.
John Lewis is the UK’s largest employee-owned company and shares profits among its staff. Last year, the bonus was 3 percent of the employee’s salary.
The second-biggest pre-tax loss in John Lewis’ history poses a challenge for incoming chief executive Nish Kankiwala who is continuing with the group’s restructuring plan. The former Hovis boss is the partnership’s first CEO.
The group launched a five-year plan in 2021 to restructure the business, cut costs, improve profit margins and invest in its stores, with a target of £300mn to £900mn in efficiency savings by 2026.
Although some customers left Waitrose for discount supermarkets such as Lidl and Aldi, according to White, the grocer’s total customers were up 7 percent to 13.7 million, with total partnership customers up 4 percent to 20.3 million. However, people “bought less”, White said, “partially reversing the huge online growth of the pandemic years”.
Shore Capital’s Clive Blake said John Lewis had “gone from being very profitable to being totally unprofitable”, adding that Waitrose had lost about 0.3 per cent of market share, taking it to 4.7 per cent of the grocery market.
Josh Holmes, senior consultant in retail economics, said the results were “worse than expected, with both Waitrose and John Lewis seeing a drop in profits as inflation pushes up costs”.
“The company has tripled its target for cost savings, but this raises genuine concerns about the impact on innovation and investment in its customer proposition,” he added.