John Lewis & Partners’ operating profits dropped dramatically by 56% £114.7 million for the year ending January 26. Key reasons were “weaker Home sales, gross margin pressure, higher IT costs, the property impact of new shops and lower profit on asset sales,” explained Charlie Mayfield, partner and chairman of the John Lewis Partnership.
Charlie stated:“In line with expectations set out in June, our Partnership profits before exceptionals have finished substantially lower in what has been a challenging year, particularly in non-food.” In contrast, operating profits at Waitrose & Partners were up 18%, “mainly due to improved gross margins.”
Discussing the “challenging” market context, the chairman emphasised the impact of: “near constant discounting across many categories from October onwards in response to the combination of subdued demand, excess retail space and some other retailers’ distress.” This resulted in John Lewis & Partners’ like-for-like sales being down by 1.4%. Charlie also highlighted: “Near-term uncertainty, politically and in the economy, is having a major impact on consumer confidence, but we do not believe the market conditions are cyclical.”
However, the chairman also highlighted John Lewis & Partners’ investment in new products, services and partners as well as the Partnership’s financial strength, with its reduced debts.
The retailer is also in “good position for a managed transition” for Brexit, having been made preparations to cover currency, tariffs, customs and labour. Charlie reflected on the continued uncertainty over the UK’s exit from the EU: “The main risk in an unmanaged transition is a strong fall in consumer confidence and the impact that has on trade. “
Top: John Lewis Partnership has announced its year-end results.
