The John Lewis Partnership has swung to a pre-tax loss of £517m in the full-year ended 31 January 2021, down from a profit of £146m reported the year before.
This was largely the result of “substantial” exceptional costs of £648m, which included the write down in value of John Lewis shops amid a “pronounced” shift to online, as well as restructuring and redundancy costs from store closures and changes to its head office.
According to the group, John Lewis shops are now held on its balance sheet at almost half the value they were before this year’s and last year’s write downs. Before the pandemic, it estimated that £6 in every £10 spent online with John Lewis was driven by bricks and mortar shops. The ratio has fallen to £3 in every £10, however.
In light of this, the group has warned that it does not expect to reopen all John Lewis shops at the end of lockdown.
Chairman Sharon White said: “She added: “Hard as it is, there is no getting away from the fact that some areas can no longer profitably sustain a John Lewis store. Regrettably, we do not expect to reopen all our John Lewis shops at the end of lockdown, which will also have implications for our supply chain.
“We are currently in discussions with landlords and final decisions are expected by the end of March. We will do everything we can to lessen the impact and will continue to provide community funds to support local areas.”
In its latest results, the group also noted that trading operating profit was “significantly challenged” during the period, as an improvement seen in Waitrose was “insufficient” to cover the substantial decline in John Lewis trading as non-essential stores closed amid lockdowns.
Although profit before exceptionals rose by £61m to £131m in its full-year results, the group said it would have made a loss before exceptionals if it weren’t for crisis-related government support.
Total government support for the retail group totalled £190m, which was made up of business rates relief and furlough support. The group noted that government funding was “critical” to cover the direct operational costs relating to Covid, as well as the “substantial” hit to trading operating profit.
The group also outlined its current intention to accept the business rates relief made available from April to June, but will keep this under review. It comes as White warned the business was “not out of the crisis yet and the economic environment remains extremely uncertain”.
Looking ahead, White said the group is now having to take “very difficult decisions” to return the business to a path of sufficient profit of £400m by 2025/26.