John Lewis Partnership sticks to strategy despite £26m half-year loss

Business made loss in six months ending 27 July.

Elton John: featured in John Lewis's Christmas campaign
Elton John: featured in John Lewis's Christmas campaign

The John Lewis Partnership has said it will accelerate its strategy of differentiating its offer with a focus on service and experiences after it reported a half-year loss of £25.9m before tax, bonus and exceptional items, compared with a £0.8m profit in the same period last year.

Of the two brands in the business, Waitrose & Partners performed better: sales dipped 0.8% to £3.37bn, but operating profit was up 6.8% to £100.8m. Sales at John Lewis & Partners fell 1.8% to £2.05bn, with an operating loss of £34.9m – 4.2% higher than last year’s loss. Both brands typically enjoy a much stronger performance in the second half of the year, which includes the Christmas period.

Speaking on a call to journalists, outgoing chairman Charlie Mayfield said that, despite the headline figures, the business' investments were paying off. Along with new product ranges and store features – ranging from sushi bars in Waitrose stores to personal-styling studios in John Lewis – these have included pay increases, leadership development and a well-being focus for partners, he said. The partners, who own the business, are seen as a key USP, as reflected in the "& Partners" branding introduced last year.

But Mayfield added: "Promising though all those moves are, the inescapable lesson of the last two years is that we need to go even faster."

John Lewis managing director Paula Nickolds said there had been a "marked difference" between the brand’s performance in fashion and beauty, and home and electricals. The latter, she said, has been affected by the lowest number of housing transactions in the UK in the past decade, meaning fewer consumers in the market for products such as carpets and furniture.

But Nickolds said sales were up in fashion and beauty, and hailed the success of changes the brand has made in womenswear, including the launch of several new own-label and exclusive brands, plus the roll-out of styling services across the store network. John Lewis is now planning a "complete relaunch" of its menswear offer, she said, including a personal-styling service with no need to book an appointment.

Nickolds and her Waitrose counterpart, Rob Collins, said they were continuing to look for additional ways to bring the two brands closer together. John Lewis and Waitrose featured in a joint ad campaign last autumn to launch the new branding and have trialled a joint loyalty scheme.

One of the ads in Waitrose's 2018 Christmas campaign, "Too good to wait", featured a family watching John Lewis' festive ad, "The boy and the piano", on TV. Both campaigns were created by Adam & Eve/DDB.

John Lewis Partnership’s profit before tax, but including exceptional items, was up from £6m to £191.5m, thanks largely to income resulting from the controversial decision in May to end its final salary pension in favour of the more affordable defined contribution scheme. It had been one of only a few private businesses to still have a final salary scheme.