John Lewis sees losses deepen as consumers hold back on big-ticket spending

John Lewis Partnership has seen its half-year losses more than double amid tougher trading with consumers holding back on buying big-ticket items.

The employee-owned group, which comprises the eponymous department store chain and Waitrose supermarkets, reported losses before tax and exceptional items of £89 million for the six months to August 1, up from £34m a year earlier. On a bottom line basis, pre-tax losses widened to £124m from £88m a year ago as it said costs also weighed on results, including moves to restructure its head office.

Sales in its department store chain fell 2 per cent as it noted that consumers were holding back on discretionary spending, while sales across the Waitrose supermarket arm rose 4 per cent. Overall half-year sales rose 2 per cent to £6.3 billion.

John Lewis Partnership comprises the eponymous department store chain and Waitrose supermarkets.

Jason Tarry, chairman of the partnership, said: “Our first-half results reflect our continued investment in our transformation, a more challenging trading environment and the increased costs of doing business.”

He added: “Consumers are holding back on spending on bigger ticket items. They’re cautious at the moment given what’s going on in the world.”

While the second half of the year including Christmas is traditionally much stronger for the retail giant, it said it was remaining cautious.

Tarry said there would be further cost pressures over the remainder of the year due to the fallout from the Iran conflict and a rising workforce bill, pushed up by national insurance tax increases and wage rises.

But he said the group was operating in a “highly competitive market” and was “committed to making sure we do everything we can” to keep prices down for shoppers.

George Holmes, managing director of business finance specialist Aurora Capital, noted: “John Lewis is a huge business, but these results tell us something important about what’s happening on high streets across the country.

“Consumers haven’t stopped spending, but they are thinking much harder about bigger purchases. That’s a difficult environment for any retailer, but especially for smaller businesses that lack the scale or financial cushion of a national brand.

“John Lewis can absorb a difficult six months and keep investing. Thousands of independent retailers don’t have that luxury. If consumer caution continues into the end of the year, we could see more small businesses prioritising cash and cutting back investment at exactly the point when the economy needs them to be growing.”

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