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Published on September 17th, 2020 | by The GC Team

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Tough time for John Lewis: store estate write-down contributes to £635 million loss

The John Lewis Partnership today reported a pre-tax loss £635 million for the first half of the year and confirmed that staff will not receive an annual bonus due to a poor profit outlook.

Excluding exceptional items, which included strategic restructuring and redundancy programmes and a £470 million write-down in the value of the retailer’s store estate, group loss in the six months to 25th July stood at £55 million. Chairman Sharon White said it was “a creditable performance in the circumstances.”

Sales were a tad higher than last year – up 1% – but shoppers were said to have spent more on less profitable lines such as laptops and loo rolls.

In John Lewis, online sales growth was strong at 73%, helping to offset the impact of shop closures – eight of the retailer’s stores did not open after lockdown – with overall sales down 10% on last year.

White said momentum is starting to build in reopened stores, with sales down around 30% on last year, ahead of expectations. Stores in retail parks are down by around 15% and are doing better than city centres, especially London which is down around 40%. 

Online now accounts for more than 60% of sales, from 40% before the pandemic. Before the crisis, stores are believed to have contributed around £6 of every £10 spent online. White said the figure may now be, on average, around £3.

Looking ahead to the second half of the year, early weeks of trading have been “encouraging” in both brands, said White, but she cautioned that the outlook is uncertain, given the broader macroeconomy, mostly for John Lewis, whose Christmas trading is particularly important to profits.

Regarding the staff bonus, White said the Partnership found itself in a similar position in 1948 when the bonus was halted following the Second World War. “We came through then to be even stronger than before and we will do so again.”

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