John Lewis cuts losses, department stores getting back on track
John Lewis remained loss-making in 2021 on a pre-tax basis, but its figures included a restored bonus of 3% paid to its Partners (the staff who own the business). And it said its profit before bonus, tax and exceptional items — or PBTBE — "rebounded" to £181 million, up £50 million or 38%, on last year. It was also £111 million (159%) better than two years ago.
The pre-tax loss was £26 million, a whole £491 million better than the prior year. But it was also £172 million (118%) lower than the profit two years ago.
The company also committed to paying staff the voluntary Real Living Wage nationwide this year and announced a 2% pay rise. But in addition, its chair Sharon White talked of price hikes to come amid “significant” cost pressures.
Whether that will impact sales is unclear, but for now, the company had good news on 2021 sales. It said total Partnership sales of £12.5 billion were up 1% in 2021.
The company operates the John Lewis department stores and webstores, as well as Waitrose supermarkets, with the latter often being the standard bearer for higher sales in recent periods.
But this time, it was the former that outperformed. The John Lewis operation achieved the highest sales in its history at £4.9 billion. This was up as much as 8% like-for-like on the previous year or 4% on a reported basis. Against two years ago, John Lewis’s sales were up 10% like-for-like and 2% reported.
The company added that it has “made a good start to our Partnership Plan but [we] are only one year through our five-year transformation”. Looking ahead, it sees “continued uncertainty from global events, affecting the economic environment, our customers, Partners and society. As inflation and energy prices rise, our customers face higher living costs. While this creates uncertainties as we look ahead, we remain focused on investing significantly in our Partnership Plan to transform and grow our business”.
For the current year it will invest £119 million in its John Lewis shops, digital services and distribution capabilities. And it’s “committing £500 million to give John Lewis customers everyday quality and value, and an improved MyJL loyalty proposition is coming later this year”.
Waitrose will also see multimillion pound store, digital and distribution investments.
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