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John Lewis post first ever loss

Partnership £25.9m down amid ‘difficult’ trading conditions and no-deal Brexit fears

JOHN Lewis Partnership have posted a £25.9million loss in their half-year report and warned that a no-deal Brexit could lead to “significant” effects they cannot offset.

The report entitled “Focus on long-term investment and success despite short-term profit pressures”, released yesterday, Thursday, September 12, saw the parent company of John Lewis & Partners and Waitrose & Partners revealed the underlying pre-tax loss – their first ever – compared to profits of £800,000 a year ago.
Overall half-year revenue also fell by 1.4 per cent year on year to £4.78billion although outgoing chairman Sir Charlie Mayfield (pictured) said: “We have historically made the majority of our profits in the second half of the year.
“Trading conditions have continued to be difficult, we have accelerated our differentiation strategy and significantly strengthened our balance sheet.
“Although we expect retail conditions to remain challenging, we are pressing on with key areas of innovation such as Waitrose Unpacked and the renewal of key ranges in areas like Menswear and Home.
“Over the next 12 months, we will also accelerate our transformation of the partnership to deliver innovation faster and increase emphasis on the competitive difference of partners.
“However, should the UK leave the EU without a deal, we expect the effect to be significant and it will not be possible to mitigate that impact. In readiness, we have ensured our financial resilience and taken steps to increase our foreign currency hedging, to build stock where that is sensible, and to improve customs readiness.
“However, Brexit continues to weigh on consumer sentiment at a crucial time for the sector as we enter the peak trading period.”
The partnership have reduced their debt by 16.4 per cent year-on-year to £2.38bn.
They said half-year losses were driven by widened operating losses at John Lewis, increasing to £61.8, from £19.3m a year ago through falling sales, surging costs of an IT overhaul and increasing cost inflation, and like-for-like sales fell 2.3 per cent.
Waitrose performed better, with underlying earnings increasing 14.7 per cent to £110.1m, though like-for-like sales slipped 0.4 per cent year-on-year.
On a statutory basis, the partnership’s pre-tax profits jumped to £191.5m from £6m a year ago, however, this included one-off items and were flattered by accounting changes.

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