The owner of John Lewis and Waitrose has said it is on track for “significantly higher” full-year profits, but refused to confirm staff would get their annual bonus next March.
Nish Kankiwala, the chief executive of the John Lewis Partnership, said “the buzz is back”, but did not commit to the return of the annual reward for the mutual’s employees, known as partners, which they last received in 2022.
The independent analyst Nick Bubb suggested the partnership could make an annual profit of £125m, up from £42m reported earlier this year. Previously, the company had said it would not pay a bonus unless profits hit £150m.
In the last set of results under the current chair, Sharon White, who will be replaced by the former Tesco executive Jason Tarry on Monday, pre-tax losses almost halved amid a recovery at the group’s supermarkets that offset falling sales at its department stores.
White’s contract officially runs until February next year but the company confirmed she would continue as an adviser to Tarry until the end of December, on her full pay of £82,500 in basic salary a month.
Kankiwala said: “These results confirm that our transformation plan is working and we expect profits to grow significantly for the full year, a marked improvement from where we were two years ago.
“We continue to invest heavily in quality, service and value, and customers are responding well – with more people shopping with us and customer satisfaction increasing. While we have much more to do, we’re well set up for a positive peak trading period.”
First-half profits were boosted by £78m of savings, helped by investments in technology that improved availability and cut waste at Waitrose, as well as a reduction in staff hours by matching staffing levels most closely with the ebb and flow of customer visits.
Pre-tax losses for the six months to 27 July were £30m, an improvement of £29m compared with the same period a year earlier. However, when stripping out £25m of one-off reorganisation costs, including job cuts, the group said it had narrowed first-half losses by 91% to £5m, after group sales rose 2% to £5.9bn.
Kankiwala said that despite “the environment for our customers remaining uncertain”, the group expected to maintain momentum with its transformation plans, which included refurbishments at key stores, such as on Oxford Street in London, where it is revamping the beauty hall and kicking off a new partnership with Waterstones.
The bookstore chain will open an outlet on the second floor of the Oxford Street store early next month, returning to the capital’s prime high street for the first time in eight years. John Lewis said it had further plans to expand the partnership, suggesting it could host bookstores in other department store outlets.
Waitrose made an operating profit of £113m, up from £38m last year, as sales rose 5% to £3.9bn, helped by better availability of products on shelves after it recovered from an IT glitch and attracting 300,000 more shoppers with new ranges such as an exclusive deal with Ottolenghi.
James Bailey, the Waitrose executive director, said it was “on course for one of the most profitable years for a decade” after shifting staff hours to focus on the weekend.
John Lewis made a £49m operating loss, widening from £25m last year, after sales slid 3% to £2bn in what it called a “challenging market”.
Homeware sales fell by 7%, as shoppers reined in spending on expensive items to save money for higher bills, while fashion was down by almost 4%, hit by “the well-documented squeeze on customers’ disposable income and unseasonal weather”.
The company has brought back its “never knowingly undersold” price pledge as well as shifting staff hours and bringing in extra workers funded by fashion brands in an effort to improve customer service.
Peter Ruis, the boss of the department store chain, said he had made “a deliberate choice to invest for the second half” of the year, when John Lewis takes the bulk of its sales. He said the relaunch of the price pledge had “been exceptional” in its first week, with 55,000 more direct visitors to the website and 5,000 more items of technology sold.
The group’s financial services and build-to-rent arm made a loss of £16m.
Clive Black, an analyst at Shore Capital, said: “It is pleasing to see this British retail institution out of the surgical ward and almost exiting the medical one, too. The business is more focused, showing clear improvement at Waitrose.”
