John Lewis Partnership is cutting costs after reporting a $284.9 million loss for the year..
In a Nutshell: The significantly wider loss from the year-ago loss of $35.4 million led John Lewis to shift its going-forward strategy to focus on improving the profitability of the business.
“The mantra for the year is cost out, margins up and customer focus,” Sharon White wrote in her chairman’s letter.
Even as “headline inflation is starting to fall, the Partnership is still seeing costs rise,” she added.
The company has been trying to costs by negotiating with suppliers and streamlining the grocery and department store assortment.
It’s testing children’s play spaces and selling new childrenswear options this spring.
But staff could be shrinking in the near future. “As we need to become more efficient and productive, that will have an impact on our number of Partners,” White wrote, referring to the company’s employees.
John Lewis “won’t be able to share a bonus this year or do as much as we would like on pay,” she added, although the retailer will continue to help defray higher living expenses in other ways, such as offsetting commuting and childcare costs.
Inflation added 179 million pounds ($220 million) to the company’s costs last year. And while the retailer saved more than 300 million pounds ($365.2 million) over the past two years, it’s looking to save another 600 million pounds ($730.5 million) by January 2026. That would triple its target to 900 million pounds ($1.1 billion) by January 2026.
John Lewis’s customer base grew by 20 million, or 4 percent, and spent 12.25 billion pounds ($14.91 billion) last year.
John Lewis attracted customers by adding more value-oriented Anyday private-label goods and opening holiday shops earlier than usual so customers could stretch their budget over a long season. It also lowered the limit on interest-free credit card purchases from 1,000 pounds ($1,217) on a single item to 500 pounds ($608.75) per basket so customers got “greater access to instalment credit.” John Lewis didn’t raise prices on fashion and home products despite inflation.
Foot traffic rose 34 percent year-over year and reaches 100 million for the first time since pre-Covid. Online traffic fell 5 percent, while app traffic climbed 13 percent. “Over a quarter of online sales are now through the App,” John Lewis said.
Executive director Pippa Wicks, who oversaw the department store business, left last month. The company announced the appointment of Nish Kankiwala as its first CEO last week.
Net Sales: Total sales for the year ended Jan. 28 fell 2 percent to 12.25 billion pounds ($14.91 billion). By business, grocery sales at Waitrose fell 3 percent to 7.31 billion pounds ($8.9 billion), while the John Lewis department store business saw sales inch up 0.2 percent to 4.94 billion pounds ($6.01 billion).
The company grew market share in fashion at its John Lewis stores, which included its company-owned labels and new brand launches. Fashion represented 37 percent of sales, up from 33 percent a year ago, while home was at 27 percent, down 1 percent from last year.
John Lewis lodged a record 60,000-plus personal styling appointments last year, and unveiled a new fashion rental service with over 3,000 customers registered. “We also partnered with thelittleloop to offer 1,500 John Lewis own-brand childrenswear products to rent,” it said.
Earnings: The company reported a loss before taxes of 234 million pounds ($284.9 million), against a loss before taxes of 27 million pounds ($35.4 million) in the year-ago period.
John Lewis said the wider loss was mostly due to property write downs.
Chairman’s Take: “Far from diverting us from the Partnership Plan, the economic backdrop has galvanised us to go faster. The Plan is about two things—increasing the appeal of our brands and building on them to diversify into new services,” White wrote.