John Lewis Partnership has released its unaudited results for the year ending 28 January, which show a decrease in total Partnership sales and a significant loss before exceptional items and tax. The employee-owned business experienced a 2% decline in sales, amounting to £12.25 billion, with sales at the John Lewis chain only rising by 0.2% to £4.94 billion. Waitrose supermarket sales also took a hit, falling by 3% to £7.31 billion. The loss before exceptional items and tax stood at £78 million, a stark contrast to the previous year’s profit of £181 million. Loss before tax widened to £234 million, a far cry from the £27 million loss the year before, as a result of inflationary pressures and property write-downs. The challenging year did present a silver lining, as customer numbers increased by 4% to 20.3 million, with Waitrose experiencing a greater boost in customer numbers compared to John Lewis.

This increase in customer numbers was attributed by John Lewis to the stronger styling and design of its own brand Fashion and Home offer. The company highlighted that it maintained its market share with a 1% increase in volumes and observed a strong performance in its branches. However, despite these positives, John Lewis’ trading operating profit plummeted by £82 million to £676 million, primarily due to trading dynamics and inflation.

Regarding online performance, John Lewis reported robust growth in its app, with over a quarter of online sales now stemming from the app. However, overall online traffic declined by 5%, although the number of omnichannel customers increased by 4%. The company aims to achieve a 60:40 online/store channel mix, resulting in a 21% share of omnichannel customers. The largest sales categories were Fashion and Technology, constituting 37% and 36% of the sales mix, respectively.

In an effort to offset losses, John Lewis intends to cut costs as part of its ongoing transformation strategy, with a goal of saving approximately £600 million by January 2026. The company has already achieved over £300 million in cost savings over the past two years. Despite the challenging financials, John Lewis maintains a strong balance sheet, comprising £1 billion in cash and total liquidity of £1.5 billion.

While cost savings are a significant focus, John Lewis has also invested in enhancing its digital capabilities and improving the in-store experience. The company has redesigned its Horsham store and is testing new concepts that will be rolled out to other locations. Additionally, a total of £5.4 million has been invested in 27 shops to enhance store designs and create a more seamless shopping experience for customers.

The newly appointed CEO, who possesses extensive experience in leading businesses through significant cost-cutting initiatives, will play a vital role in driving the company’s transformation and achieving its cost savings targets. To support its turnaround process, John Lewis plans to sell valuable assets, such as its golf courses, in order to generate additional funds for investment.

Overall, despite the challenges John Lewis Partnership faces, including declining sales and losses, the company remains committed to addressing these issues and ensuring its long-term viability. By focusing on cost savings, improving digital capabilities, and enhancing the in-store experience, John Lewis aims to maintain its competitiveness within the retail industry.

Sources:
Retail Gazette
The Guardian