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John Lewis Partnership's half-year results, released on Thursday, have provided reassurance that the British retailer is making progress. The update indicated that while Waitrose's performance mitigated lower revenue at John Lewis, a significant reduction in partnership losses suggested that improvements are underway.
The partnership's losses decreased from £59 million to £30 million over the six months ending in July, a result of cost-cutting measures that have included job reductions at John Lewis in recent years. Analysts from Shore Capital noted that these results demonstrated “further progress in its journey of self-improvement,” following a period of considerable struggle during and after the pandemic. They emphasized that these cuts would be “critical” for future success, stating that it is encouraging to see the retailer emerging from a difficult phase.
The improving figures are expected to enhance profitability as the year progresses, which should be encouraging for new chair Jason Tarry as he assumes his role this month. Analysts from Third Bridge also pointed out that the upcoming Christmas period could provide a boost, as John Lewis typically outperforms its competitors during this season.
John Lewis’ decision to reinstate its ‘never knowingly undersold’ pledge earlier this month has sparked debate. The pledge, which promises to match prices of branded goods with those of numerous rivals, was initially dropped two years ago. Shore Capital warned that shoppers might no longer be influenced by such promises, labeling the decision as surprising. In contrast, Third Bridge viewed the move positively, suggesting that customers value such assurances.
The impact of this decision on customer numbers, which increased by 0.5 million over the first half of the year, remains to be seen. Shore Capital noted that while the pledge could help, the true effectiveness would depend on the details. Third Bridge acknowledged that while a swift return to former glory is unlikely, establishing a clear brand identity and a strong foundation is crucial for future success. The phased approach will be important, with the initial steps laying the groundwork for long-term improvements.