John Lewis Partnership Plc has pushed back a crucial turnaround plan by two years as stubbornly high inflation and weak online sales stunt Chairman Sharon White’s efforts to revive the business.
(Bloomberg) — John Lewis Partnership Plc has pushed back a crucial turnaround plan by two years as stubbornly high inflation and weak online sales stunt Chairman Sharon White’s efforts to revive the business.
The loss-making retailer, which also owns upmarket grocer Waitrose, said in first-half results that additional cost hikes and extra investment meant it won’t hit a goal of £400 million ($499 million) in profits until 2027/28, rather than the previous target of 2025/26.
White also said there could be a setback to plans for 40% of profits to come from non-retail activities, such as housing, by 2030.
“We’ll have to see whether that also has a bit of a delay to it,” White said during a call with journalists. She said inflation had “hit like a hurricane,” adding that the business needed to invest more in modernization and technology than it previously expected.
John Lewis narrowed first-half losses before tax by 43%, to £56.2 million ($65.4 million), according to the earnings statement. The company, which is owned by its employees, saw overall sales rise 2%.
The ongoing losses underline how far John Lewis has to go with its turnaround plan, which has been under way since White took charge in 2020. The overhaul has involved shutting stores, reducing staff and diversifying into real estate and financial services.
Earlier this year the retailer was forced to cancel staff bonuses for the second time in three years and warned of job cuts. It said Thursday that modernizing the business, improving customer service and pay rises would take precedence over paying a bonus.
White said a decision on the partnership bonus would not be made until March.
John Lewis will launch interest-bearing credit for the first time in October, in a mission to boost sales of big ticket items in technology and home, which have fallen. It said sales in less expensive areas, such as beauty and fashion, have performed better.
While in-person sales at John Lewis department stores improved by 2% in the first half, online sales fell 4% — partly due to customers holding back on big-ticket goods during Britain’s cost of living crisis.
Waitrose volumes fell 5% in the first half as it was hit by tough competition and did not cut prices as quickly as some rivals. An IT incident which affected the grocer’s supply chain reduced profit in the half by nearly £12 million. Waitrose said volumes are starting to recover as the second half progresses.
–With assistance from Katie Linsell.
(Updates with quotations from Sharon White. A previous version was corrected to clarify details of the turnaround plan.)
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