John Lewis blames budget tax hikes for deeper loss

The John Lewis Partnership (JLP) has blamed budget tax hikes for a deeper half-year loss.

The UK’s largest employee-owned business, which owns John Lewis department stores and Waitrose supermarkets, reported a headline loss before tax and exceptional items of £34m for the six months to 26 July.

That compared to a £5m loss in the same period last year. The higher figure was reached despite a 4% rise in group sales to £6.2bn.

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“This result was significantly impacted by costs not present in the equivalent prior period”, the partnership explained, “including £29m of costs for the new Extended Producer Responsibility (EPR) packaging levy (where we took the full annual cost in our first half results), alongside higher National Insurance Contributions (NICs)”.

JLP said the loss figure also reflected additional investment in its systems and growth-led teams.

It insisted it was on track to grow profitability in the core second half of its financial year, despite a “challenging” macroeconomic environment, as both operations were outperforming in their respective markets.

The company cited benefits from its investment, which hit £191m over the six months, have been prioritised over partner bonuses during several years of recovery for the group that has seen underperforming department stores closed and jobs lost.

Jason Tarry, the former Tesco executive who has chaired the partnership for a year, said: “Our clear focus on accelerating investment in our customers and our brands is working: more customers are shopping with us, driving sales, and helping Waitrose and John Lewis outperform their markets.

“We achieved our highest recorded levels of positive customer satisfaction, a testament to the great service of our partners.

“The investments we are making, combined with our plans for peak trading, provide a strong foundation for the remainder of the year.

“While we are reporting a loss in the first half, we’re well positioned to deliver full-year profit growth, which we’ll continue to invest in our customers and partners.”

Market analysts have cautioned that the sales figures are likely to have been flattered by the disruption to trading at rival M&S, which suffered a cyber attack in April.

But Robyn Duffy, consumer markets senior analyst at RSM UK, said of the sales uplift: “Waitrose’s performance has been a key driver, benefiting from a renewed focus on its food proposition, including a greater emphasis on lower prices and a more effective adoption of technology to improve the customer experience.

“Meanwhile, the John Lewis retail arm is successfully drawing in customers through a combination of revitalised physical stores, a focus on meaningful brand partnerships, and the reintroduction of its Never Knowingly Undersold price matching strategy.”