John Lewis needs Xmas miracle after racking up near £100m half-year loss

John Lewis warned staff there may not be an annual bonus this year after it crashed to a loss of nearly £100 million.

As analysts said it would take a “Christmas miracle” for the payout to go through, the retailer said yesterday it was suffering from “unprecedented” cost increases and lower consumer spending.

Chairman Dame Sharon White said: ‘No one could have predicted the magnitude of the cost of living crisis that has unfolded, with energy prices and inflation exceeding everyone’s expectations.’

The High Street, owner of the John Lewis department stores and Waitrose supermarkets, said the number of shoppers visiting its stores rose in the first half of the year.

But, it warned, they were spending less. At Waitrose, the basket shrank by a fifth as shoppers flocked to the Anyday range.

At John Lewis, consumers are suspending large ticket purchases in favor of dining out and going on vacation. The partnership said first half sales fell 2.6 percent in the first half to £5.7 billion.

Waitrose’s sales fell 5 percent to £3.6 billion. Meanwhile, John Lewis’s turnover rose 3 percent to £2.1 billion

White said, “As a business, we’ve experienced unprecedented cost inflation for grocery and general goods. We’re missing out on profit by making choices based on the kind of business we are, guided by our purpose.’

John Lewis gave a one-off payment of £500 to his 76,000 full-time partners and is offering free food during the services this winter.

The retailer also held back some of the rising costs of food and materials rather than passing it on to customers.

White added that John Lewis will need “a substantial performance boost” to award a bonus this year.

She warned the outlook for the rest of the year, including the pivotal Christmas season, is “highly uncertain” as the cost of living rises.

She kept hopes for the bonus, stressing that it is “not unusual” for John Lewis to suffer a loss in the first half, as things are heavily dependent on Christmas.

Zoe Miller, senior analyst at analytics and consulting firm GlobalData, said: “Profit could deteriorate as the retailer emphasizes how integral Christmas will be to its performance this year.

“And as the energy ceiling rises next month, more consumers are expected to tighten their belts.” Retail analyst Nick Bubb said that if the bonus is scrapped again, the one-time cost of living grant and free Christmas meals will already soften the blow.

He said: ‘It’s hard to name the outlook pending more clarity in the upcoming mini-budget on the government’s plans to support consumers and business, but it will take a Christmas miracle before the John Lewis Partnership can achieve this. pays a bonus every year. .’

The group scrapped its bonus scheme during the pandemic for the first time since 1953 when stores were closed and the chain lost millions.

Last year, it recovered the price at 3 percent of salaries based on the group’s strong performance, although this was a long way from the record 17 percent in 2013.