John Lewis Partnership losses widen as retailer gives 'cautious' outlook

(Sharecast News) - John Lewis Partnership reported a wider first-half loss on Thursday as increased investment and tougher trading conditions weighed on performance, while the retailer said it remained "cautious" about the outlook for the second half.

The employee-owned group posted a loss before tax and exceptional items of £89m for the 26 weeks ended 1 August, compared with a £34m loss a year earlier. Including £35m of exceptional costs, primarily related to head-office restructuring and technology modernisation, the pre-tax loss would have been £124m, compared with £88m previously.

Group-wide sales nevertheless rose 2% to £6.3bn, while gross margin improved by 20 basis points.

Investment in the business increased 29% to £246m, with the group on track to spend around £600m over the full year.

John Lewis sales fell 2% to £2.0bn amid weaker demand for larger discretionary purchases, while its adjusted operating loss widened by £30m to £83m.

However, Waitrose performed more strongly, with sales up 4% at £4.3bn. However, adjusted operating profit slipped £7m to £103m as the grocer absorbed higher costs and increased spending on loyalty and lower prices.

Chairman Jason Tarry said: "Our first-half results reflect our continued investment in our transformation, a more challenging trading environment and the increased costs of doing business."

Looking ahead, the company said the wider economic and geopolitical backdrop had weighed on customers in the first half and that it remained "cautious in our outlook for the second half".

It added that, as most of its profit is typically generated in the second half, the full-year result would be determined by performance during the key peak trading period.