John Lewis expects recovery to take two years longer
John Lewis’ plan to return to profit has been pushed back by two years to 2028, with the retailer citing inflationary pressures and greater than expected investment requirements.
The retailer said that high rates of inflation in 2022, which led to an increase in costs of £179m, had led it to sharpen its focus on its “long-standing productivity challenge”.
The group, which also owns Waitrose, had hoped to return to profitability in 2026.
John Lewis has struggled against its high street competitors in recent years and has closed a number of stores, whilst Waitrose has faced tough competition from cheaper rivals as consumers grapple with a higher cost of living.
In the six months to 29 July 2023, John Lewis’ losses before tax narrowed by 43% year-on-year, but were still at a deficit of £56.2m.
In the same period, Waitrose saw the value of its sales increase by 4%, however as prices for its goods jumped by 9%, the actual amount of products sold had actually decreased.
John Lewis said the economic outlook remains “uncertain”, but it still expects an improvement in its full year results.
The retailer said its priorities for investment remain the modernisation of the business, the improvement of customer service, and staff pay. It said these would take precedence over staff bonuses, which it calls partners.
Sharon White, chair of the John Lewis Partnership, said: “The partnership is a unique model that has been tested and come through stronger many times in our 100-year history. While change is never easy – and there is a long road ahead – there are reasons for optimism. Performance is improving. More customers are shopping with us. Trust in the brands and support for the partnership model remain high.”
In May, White survived a vote of confidence from John Lewis members amid growing pressure to turn the business around. In a separate vote, however, partners expressed their unhappiness over her management within the prior year.