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The owner of John Lewis and Waitrose has returned to profit after three years of losses, in a sign that chair Dame Sharon White’s turnaround plan is starting to pay off.
Supermarket chain Waitrose helped drive the improvement as it lifted prices, offsetting a weaker performance from department store John Lewis.
White said the group would focus “unashamedly” on its retail offering by opening more Waitrose shops and refurbishing existing ones, as well as revitalising John Lewis’s products, as it scrapped targets for its non-retail divisions — a key plank of White’s vision.
Pre-tax profits at the John Lewis Partnership, the UK’s largest employee-owned company, were £56mn in the year to January, compared with a £234mn loss the previous year. Sales climbed 1 per cent to £12.4bn.
The company said in September that it would take two more years to complete a turnaround that White launched in 2020 when she joined from media regulator Ofcom.
Waitrose’s sales rose 5 per cent to £7.7bn driven by an average 6.6 per cent increase in prices. Sales at John Lewis were down 4 per cent to £4.8bn.
Despite the improved performance, John Lewis said it would not be paying staff a bonus at a time when staff morale has been affected by changes to redundancy pay and speculation about future job losses. It said it would instead increase investment to £542mn this financial year, up from £312mn last year.
“We have made significant progress in the last year to return the business to profitability and delivered results that allow us to increase investment in our retail businesses; we expect profits to grow further this year,” White said.
However, the company scrapped specific targets for its financial services and build-to-rent divisions, “with the economic environment having changed so dramatically since 2020”.
White previously pledged to build and rent out 10,000 homes as part of plans to generate 40 per cent of profits from outside retail by 2030. In October, she announced she was stepping down in 2025, unless a successor was found before.
At half-year results in September, the group warned it would take a further two years to complete a turnaround of the department store chain and supermarket to 2027-28 from 2025-26.
Since then, Nish Kankiwala, the partnership’s first chief executive appointed a year ago in a role created by White, has “refreshed” the plan and promised staff that they would prioritise retail.
Nick Bubb, an independent retail analyst, said that both chains “achieved more cost savings than we expected” in the second half of the year, when they also made two-thirds of their profit.
The group has saved £420mn since 2021 by making the business more productive, it said, against a target of £900mn by January 2026.
Bubb added that “there might have been just enough there to pay a small bonus” but the retailer chose to reinvest in the business and wages.
In December, the company raised additional funding of £260mn through a sale and leaseback of 11 Waitrose shops and a new loan to shore up its balance sheet. Because of its unusual structure, it is unable to raise equity externally.
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