Losses Narrow At John Lewis Partnership

• John Lewis Partnership reports a marked improvement in first half results and is on track to deliver significantly higher profits1 for the full year 
• Partnership sales2 topped £5.9bn in the half, up 2% year-on-year
• Total revenue3 reached £5.2bn, an increase of 2% 
• Loss before tax and exceptional items1 improved from £57m to £5m (91% reduction)
• Loss before tax narrowed by 49% from £59m to £30m
• Operating profit margin4 increased 1.2 percentage points
• Cash generated from operations5 was £147m, up £97m year-on-year
• 0.5 million new customers in the half to reach 23.1 million with customer satisfaction up
• Transformation on track with investment of £0.5bn this year; up 53% year-on-year

Nish Kankiwala, Chief Executive Officer of the John Lewis Partnership, said: “I want to thank all our Partners for their hard work during the half, and thank our customers for supporting our loved brands. These results confirm that our transformation plan is working and we expect profits to grow significantly for the full year, a marked improvement from where we were two years ago.

“We continue to invest heavily in quality, service and value, and customers are responding well - with more people shopping with us and customer satisfaction increasing. While we have much more to do, we’re well set up for a positive peak trading period and on target to significantly improve our performance for the full year.”

The John Lewis Partnership, home to Waitrose and John Lewis, reports significant improvement in first half results as we deliver on our multi-year transformation plan and maintain our laser focus on brilliant retail. 

Two years of consistent progress against key financial and customer metrics show the plan is working. The Partnership is on track to deliver significantly higher profit1 for the full year 2024/25 compared with last year.

Partnership sales were £5.9bn, up by 2% from a year earlier, while revenue was up 2% to £5.2bn. Loss before exceptional items has improved from £57m this time last year to £5m in the 26 weeks to 27 July 2024. Loss before tax was £30m, an improvement of £29m on 2023/24, despite investing in higher exceptional costs relating to the ongoing simplification of the business (£25m this year versus £4m last year). We expect further profit growth in the second half, when we typically generate a significantly higher proportion of our profit.

During the half, the Partnership started reporting the performance of its brands by Adjusted operating profit6, to better reflect the way resources are managed across the Partnership. Partnership Adjusted operating profit of £48m was up £62m this half, returning to profit for the first time in three years. Waitrose outperformed the market, with sales up 5% and Adjusted operating profit growth of £75m. John Lewis sales were down 3% amidst a slower external environment for general merchandise. Adjusted operating profit was down £24m year-on-year.

Our customer focused transformation, which saw us stepping up store investment, new product innovation, value and service, resulted in 0.5 million more people shopping with us, reaching 23.1 million customers. Our loyalty programmes also saw growth, with 17% more members in John Lewis and 5% in Waitrose. In Waitrose, we rebalanced Partner working hours to the times our customers need us the most, and have announced similar proposals in John Lewis so we have more Partners serving customers. Investments in technology are also paying off and a major investment in digital headsets is enabling us to get customers an expert quickly in store, and has helped improve service. 

Alongside improvements for customers, these investments are making us more efficient, as evidenced by our Operating profit margin increasing by 1.2 percentage points this half. A further £78m of savings from continued simplification of our business helped deliver £500m in savings since January 2021, and we remain on track to hit our target of £900m by 2026. 

Cash generated from operations increased by £97m to reach £147m, enabling an accelerated investment in our transformation. We expect to invest £500m this year, up 53% on last year; which forms part of our £2.4bn investment over the next four years, including new Waitrose stores and refurbishments in both brands. Our financial position is robust. Total liquidity, up £348m year-on-year, remains strong at £1.7bn, comprising £1.3bn of cash and short term deposits and a £0.4bn undrawn revolving credit facility. Strong liquidity means we can self-fund our ongoing transformation. We plan to repay our £300m bond due in January 2025 from cash reserves.

Waitrose

Waitrose delivered strong profit growth in the first half, with volume growth helped by record availability7 of 96.5% and a tenth consecutive quarter of customer growth. Sales increased by 5% with volume growth of over 2% and Average Item Price up just over 2%. Adjusted operating profit increased by £75m while gross margin improved by 1.2 percentage points. We ended the half strongly with market share growth.

Our focus on providing exceptional service to food lovers is paying off, in a half which saw us: 

• Investing in quality through our collaboration with chef Yotam Ottolenghi; refreshing our Waitrose No.1 range and a partnership with food health company Zoe, which have all led to a rise in sales;
• Continual investment in providing value with a significant investment of £39m in price cuts in the first half, without compromising on quality or ethics; 
• Launching new propositions such as an in-house Gail’s bakery and acquiring the quality meal delivery service Dishpatch to grow sales; 
• Helping our suppliers move to more nature-friendly farming, with our groundbreaking regenerative agriculture programme Farming for Nature;
• Investing in stores, including a commitment to open up to 100 new convenience shops over the next five years and the next phase of our store modernisation programme. Following the refurbishment of our Finchley Road store, another eight Waitrose stores will be refurbished in the second half; and 
• Receiving a Royal Warrant from His Majesty King Charles III, the only Royal Warrant granted to a supermarket, for which we are grateful and proud.

Our efforts have been well received by customers, with 300,000 more shopping at Waitrose, in addition to more shoppers discovering our brand through Deliveroo and UberEats. We saw growing customer satisfaction and were the highest rated grocer in the latest UK Customer Satisfaction Index (fourth out of 275 top UK companies) and are proud to have won The Grocer annual award for customer service for the fourth year in a row. Part of this success can be attributed to our decision to rebalance our store working hours at our busiest times, ensuring that Partners are available to assist customers when they need us the most. Additionally, completion of the next stage of our major replatforming of our supply chain systems greatly contributed to record levels of product availability. 

John Lewis

Sales in the first half were £2.0bn, down by 3%, in a challenging market. Gross margins improved by 0.5 percentage points in the first half. However, Adjusted operating profit declined by £24m off the back of lower sales and an investment in our Partners and technology to enhance customer service. In response, customer numbers grew to 13.6m, up 2%, and our customer experience ratings and overall Net Promoter Score both improved. 

Beauty sales were up and we significantly outperformed year on year. Fashion was impacted by the well-documented squeeze on customers’ disposable income and unseasonal weather, with sales down. Lower demand for ‘big ticket’ items saw softer Home sales, while cookshop sales increased. We performed well in Technology with our carefully curated range of new and exclusive products, particularly in smart wearables and mobile phones. 

We have a clear strategy to drive further growth and productivity in John Lewis with investment to enhance the customer experience, including:

• Reimagining Never Knowingly Undersold for how customers shop today - price matching 25 major UK retailers in store and now online with the help of AI technology. This is one element of our investment plan to excite our customers on quality, service and price;
• Investing in our flagship Oxford Street store by creating one of the largest Beauty Halls in the country. Additionally, our High Wycombe and Cheadle stores are undergoing investment, and all of our stores are benefiting from upgrades;
• Forging new partnerships, including with Waterstones, which is set to debut in John Lewis Oxford Street in October 2024;
• Investing in our own and third party brands, such as exclusive collaborations with Collagerie on homeware and A.W.A.K.E. MODE for fashion, the launch of Trinny London and the UK retail exclusive for the Oura Ring; and
• Focusing on customer service with more Partners serving customers on the shop floor and training for every John Lewis Partner in customer facing positions; improved use of technology such as digital headsets; and taking payments throughout stores and not just at the till.

Building complementary businesses for the long term

The half saw us make good progress on developing complementary businesses for the long term. We secured planning consent to develop rental homes in Bromley, with two more sites in the planning process. We refreshed the brand of our financial services business, now John Lewis Money, which continued to grow customers in the half, up 2%.

Outlook

It has been a half of strong progress in our transformation. As we look ahead, our top priority remains serving our valued customers well by enhancing our products and customer service, and making our business more productive. 

In the upcoming months, customers will further benefit from an acceleration in our investment programme. This includes the completion of refurbishments in John Lewis stores Oxford Street, High Wycombe and Cheadle; and nine Waitrose stores, as well as the opening of a new convenience store in Hampton Hill in London. In addition, both brands will showcase new season products and services in the run up to the key Christmas trading period. Our customers will also be able to benefit from our linked loyalty hub, which will reward shopping at both of our brands. 

We have historically delivered the majority of our profits in the second half of the year. Despite the environment for our customers remaining uncertain, we expect to maintain financial momentum from consistent delivery of our multi-year transformation. As a result, we are confident that full year pre-exceptional profits should be significantly above the £42m we reported in 2023/24.

The full statement can be downloaded here. 

1 Profit/loss before tax, Partnership Bonus and exceptional items (PBTBE/LBTBE). Additional detail is included in the Glossary. Partnership. Bonus is £nil for 2024/25 half year and 2023/24 and exceptional items are described on page 13 of the full statement. 

2 All references to Partnership sales or sales are Total trading sales which includes VAT, sale or return and other non-cash accounting adjustments. 

3 Revenue is Total trading sales, less VAT, sale or return and other non-cash accounting adjustments.

4 Operating profit margin is operating profit before exceptional items and property profit/(loss) as a percentage of revenue. 

5 Net cash generated from operating activities before Partnership Bonus, bond finance costs and BonusSave plan. 

6 Adjusted operating profit is Operating profit before exceptional items and profit/loss on property disposals.

7 Measured as the number of products that are in stock, and available for purchase divided by the total number of products we offer. 

Source : John Lewis Partnership

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