John Lewis’s half-year report has revealed a pre-tax loss of £25.9 million, compared to a profit of £0.8m this time last year.
The retailer blamed “difficult” trading conditions, which were not helped by “subdued consumer confidence”, for a large portion of the loss.
“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. The Partnership made a loss before Partnership Bonus, tax, exceptionals and IFRS 16 of £(25.9)m, down £26.7m,” commented Sir Charlie Mayfield, partner and chairman of the John Lewis Partnership.
“Within that, operating profit before exceptionals and IFRS 16 improved in Waitrose & Partners by £14.1m to £110.1m, largely due to property profits this year, but we also saw an improvement in gross margins and a strong operational performance. In John Lewis & Partners, operating losses before exceptionals and IFRS 16 increased by £42.5m to £(61.8)m, reflecting lower sales in categories with more considered purchasing, cost inflation (including non-management Partner pay) well ahead of the level of sales growth and higher IT costs.
“Our Profit before tax, which includes exceptional income and the charge from adopting IFRS 16 was £191.5m, up £185.5m.”
Looking at the electricals and home technology in particular, this area of the business is where John Lewis said the impact of subdued consumer confidence was most felt. “Demand for more considered purchases has remained depressed, but also in increased marketing costs as we responded to soft consumer demand,” said the retailer.
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