John Lewis Partnership has reported a 98.8 per cent fall in underlying pre-tax profits to £1.2 million for the six months to July 28. Gross sales rose 1.6 per cent to £5486.6 million with revenue up 1.5 per cent to £4856.7 million. Profit before tax fell 80.5 per cent to £6 million while total net debts were £700 million lower than the same period a year before.
Sir Charlie Mayfield, Chairman of the John Lewis Partnership, commented: “These are challenging times in retail. Our profits before exceptionals are in line with what we said they would be at our Strategy Update in June. We’re continuing to improve our offer for customers while ensuring we have the financial strength to continue developing our business going forward. This is reflected in both brands continuing to grow sales and customer numbers, and our total net debts reducing.”
Despite the reduction in profits, the company’s total net debts have reduced with the accounting pension deficit more than halving since January 2018 to £171.3m (net of deferred tax) and the estimated actuarial pension deficit of £89m represented a funding level of over 98%. Total net debts are £700m less than last year and John Lewis continues to maintain a strong liquidity position, all consistent with plans to invest in a strategy of differentiation at a rate of £400m-£500m per year.
“With the level of uncertainty facing consumers and the economy, in part due to ongoing Brexit negotiations, forecasting is particularly difficult but we continue to expect full year profits to be substantially lower than last year for the Partnership as a whole. We expect profit growth in Waitrose & Partners will be offset by the continuing margin pressure in John Lewis & Partners and by incremental costs of investment. We are continuing with our plans for the future in this half and have great confidence in the attractiveness and potential of our offer across Waitrose & Partners and John Lewis & Partners as we approach the final quarter,” adds Mayfield.
