The owner of John Lewis and Waitrose has said it is on track for “significantly higher” full-year profits after it slashed half-year losses amid a recovery at its supermarkets that offset falling sales at its department stores.
Nish Kankiwala, the chief executive of the John Lewis Partnership, 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.”
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 for the six months to 27 July were £30m, almost half those in the same period 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 London’s Oxford Street, where it is revamping the beauty hall and kicking off a new partnership with the Waterstones bookstore chain.
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 and attracting 300,000 more shoppers with new ranges such as an exclusive deal with Ottolenghi.
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 big-ticket 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”.
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Technology sales were down 1% but beauty sales were up. 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.
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.”