John Lewis Partnership released its half-year results on Thursday, reporting that its transformation efforts are progressing as planned. The retailer announced a notable improvement in its first-half performance and expects to achieve significantly higher profits for the full year.
The company’s sales, including VAT, reached £5.9 billion, marking a 2% increase compared to the previous year. Total revenue also rose by 2%, amounting to £5.2 billion.
Despite still facing losses, the company’s pre-tax loss before exceptional items was reduced to £5 million, a significant improvement from last year’s £57 million loss. The pre-tax loss narrowed from £59 million to £30 million. The operating profit margin improved by 1.2 percentage points, and cash generated from operations increased to £147 million, up by £97 million year-on-year.
The company anticipates further profit growth in the second half of the year, when it usually generates a larger share of its annual profit. John Lewis Partnership also reported gaining 500,000 new customers, bringing the total to 23.1 million, with increased customer satisfaction and growth in loyalty program memberships.
However, the department stores segment saw a 3% decline in sales to £2 billion amid a challenging market. Although gross margins improved by 0.5 percentage points, adjusted operating profit at John Lewis fell by £24 million due to lower sales and investments in staff and technology aimed at improving customer service.
On a positive note, Beauty sales saw significant growth, outperforming the previous year. Fashion sales, however, were affected by reduced disposable income and unseasonable weather, while Home sales also softened. Technology sales performed well.
The company plans to enhance John Lewis’s performance by reintroducing its Never Knowingly Undersold promise with AI technology and investing in its flagship Oxford Street store to create one of the largest Beauty Halls in the country. Additionally, the High Wycombe and Cheadle stores are undergoing upgrades, and all stores are benefiting from improvements. New brand partnerships, including with Awake Mode and Trinny London, are also part of the strategy.
CEO Nish Kankiwala stated, “These results confirm that our transformation plan is working, and we expect profits to grow significantly for the full year, a marked improvement from two years ago. We continue to invest heavily in quality, service, and value, and customers are responding positively. While there is more work to be done, we are well-positioned for a successful peak trading period and on track to significantly improve our full-year performance.”
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