(Alliance News) - John Lewis Partnership trimmed its loss despite booking GBP54 million in redundancy costs as the retailer was forced to make "difficult but necessary decisions".
In the six months to July 31, the department store and grocery chain operator's pretax loss narrowed to GBP29 million from GBP635 million a year earlier. Two years earlier, it had posted a GBP192 million profit, aided by a GBP249.0 million gain from the closure of a defined-benefit pension scheme.
Before exceptional items and its partnership bonus, John Lewis swung to a pretax profit of GBP69 million from a GBP55 million loss a year earlier. It also represented an improvement from the GBP52 million loss in the six months ended July 2019.
Exceptional costs during the half year totalled GBP98 million, including GBP54 million in restructuring expenses.
Revenue in the first half, meanwhile, rose 4.8% to GBP5.15 billion from GBP4.92 billion and was up 7.6% from pre-virus levels.
Total trading sales, which unlike revenue includes value-added tax, increased 5.5% year-on-year to GBP5.87 billion from GBP5.57 billion.
John Lewis operates its eponymous department store brand and the Waitrose grocery chain.
During the period, it closed eight John Lewis stores and is currently consulting on closing an associated delivery hub. A leaner John Lewis Partnership now has fewer managers in both units, the company added.
"We are in year one of our five-year partnership plan to return the business to sustainable profit of GBP400 million a year, the level of profit required to meet our ambitions for customers, partners and communities. This half year, we have had to take difficult but necessary decisions to reduce costs and improve our competitiveness," the company said.
"The number of head office roles have been reduced, and we are consulting on plans to have fewer managers in John Lewis and Waitrose. This has been painful for the partnership. Eighty per cent of affected partners have found new roles in the partnership in the half, while retraining support has been available to partners to secure work outside. We are also creating new jobs: a total of 500 next year to operate our new warehouse at Fenny Lock. We have faced our biggest ever test and we will come through stronger."
The company will decide whether or not it will pay a partnership bonus in March.
"The conditions for paying a bonus to partners - sustainable profits of GBP150 million and net debts of less than four times our earnings - were set by the board in September 2020 and remain in place," it said.
It does not report a debt ratio in its first half.
In the financial year that ended this past January, John Lewis did not pay its customary partnership bonus. Prior to that, the last time the bonus was axed was in 1948, when John Lewis was dealing with the fall out of World War Two. It didn't resume bonus payment again until 1954. In financial 2020, John Lewis paid out GBP31 million in partnership bonuses.
By Eric Cunha; ericcunha@alliancenews.com
Copyright 2021 Alliance News Limited. All Rights Reserved.
