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John Lewis Partnership has reported a loss of £25.9m for the first half of the year, warning that a no-deal Brexit may lead to “significant” impact it may not be able to mitigate.
For the half-year period ending 27 July 2019, the department store chain revealed that revenues slipped by 1.4% to £4.78bn compared with £4.85bn the previous year. John Lewis attributed this to the impact of subdued consumer confidence, impacting particularly on its sales in home and electricals.
The company that losses were primarily driven by widened operating losses at John Lewis, which increased to £61.8m up from £19.3m the previous year, due to suffered falling sales, costs of an IT overhaul and increasing cost inflation.
During the period John Lewis Partnership reported it had reduced its total net debts by £469.2m compared to July 2018, with one of its “key priorities” to reduce is debt ratio to around three times cash flow within four years.
Looking ahead, John Lewis said that despite the loss the company “historically” makes the majority of its profits in the second half of the year, and despite retail conditions which it anticipates to “remain challenging”, it plans to continue to press on with “key areas” of innovation.
Over the next 12 months, it said it will “accelerate” its transformation of the Partnership to deliver innovation “faster” and increase emphasis on the competitive difference of Partners.
However, it warned should the UK leave the EU without a deal, it expects the effect to be “significant” and it “will not be possible to mitigate that impact,” adding “Brexit continues to weigh on consumer sentiment at a crucial time for the sector as we enter the peak trading period”.
Sir Charlie Mayfield, partner and chairman of the John Lewis Partnership, said that “despite profit pressures”, the company has seen “encouraging results in several areas”.
He added despite a “weak grocery market”, Waitrose and Partners had a “good trading performance” with only a marginal decline in like-for-like sales, and continued improvement in gross margins, benefiting from 47 completed category reviews. Waitrose also saw strong online grocery sales growth of 10.7%.
Mayfield said: “The re-drawing of the UK retail landscape continues apace. While trading conditions have continued to be difficult, we have accelerated our differentiation strategy and significantly strengthened our balance sheet…”
