Owner of John Lewis and Waitrose reports 77% drop in annual profits


United Kingdom retail group John Lewis Partnership, which operates John Lewis department stores and the Waitrose supermarket chain, saw profit before exceptionals fall 21.9% to £289.2 million in 2017, according to its full-year results, released today.

Annual results showed that gross sales across the partnership rose 2% to £11.6bn. Group operating profit before bonuses and and exceptional items fell 25% to GBP360.8 million from GBP478.2 million.

We therefore anticipate further pressure on profits", John Lewis said in its statement on Thursday. "Consumer demand was subdued and we made significant changes to operations across the Partnership".

The group said it expected trading to be volatile in 2018/19, with continuing economic uncertainty and no let up in competitive intensity.

For the 52 weeks to January 27, the retailer recorded pretax profit of GBP103.9 million, down 77% from GBP452.2 million in the year ago period, on a revenue of GBP10.20 billion, up 1.8% from GBP10.03 billion.

John Lewis Partnership, which is owned by the employees of the two retail chains, had already warned in January that annual profits would be hit amid attempts to remain competitive despite facing cost pressures from the weak pound.

In the first five weeks of the new financial year, the partnership recorded 0.6% year-on-year growth in gross sales.

The news comes as John Lewis introduced a new concierge-style shopping experience at its new Oxford store, where staff had been provided "theatre training" by The Oxford Playhouse to teach them "the art of outstanding service". Waitrose gross sales of £6.75bn were 1.8% ahead of last time, or 0.9% on a like-for-like basis, while John Lewis gross sales of £4.84bn were 2.2% up on a year ago, or 0.4% LFL.

Following a profit warning in January, Sir Mayfield said the business chose to reduce the proportion of profits paid as Partnership Bonus a year ago in a bid to absorb the impact of tougher trading conditions.

"We did both and I am pleased to say that despite lower profits, strong cash flow has enabled us to reduce our total net debts". However, operating profit before exceptional items was £172.0m, down 32.1 per cent, "held back primarily by lower margins due to our decision not to pass on all cost price inflation to our customers, and by investments in customer experience".