John Lewis (JLH.L) narrowed its losses in the first six months of 2021, with profit on exceptional items rising by £124m on the previous half, after a difficult trading period during the pandemic hit its top line.
Compared to the first half of 2019/20, when the upmarket chain made a loss of £52m, profit was up £121m.
John Lewis said cost reduction is a key priority and that it had made savings of £66m in the first half. It received business rates relief from the government of £58m.
A 6% growth in sales underpinned the bump in profit for the half, with Waitrose benefitting from a 2% increase on last year, and a 10% bump compared with 2019/20.
Property costs, including lease obligations due to shop closures, of £24m hit the chain's top line alongside redundancy costs of £54m from a restructuring. The business said that these upfront costs will help to drive an annual reduction in costs of £300m by the end of 2022/23.
Its partnership with Deliveroo (ROO.L) expanded from 40 to 150 shops with a potential reach of up to 13 million customers.
The chain said it is already generating sales of almost £1m a week and attracting younger customers.
Losses before tax narrowed from £635m to £29m — the previous half was clouded by a write-down in the value of John Lewis stores.
As part of its Partnership Plan, the chain is seeking to grow profits beyond retail in areas "where the brand is trusted, margins are higher and customer demand is strong".
Following the relaunch of home insurance and the roll out of point of sale credit for the first time online in the first half, in August John Lewis Financial Services launched its first investment products in partnership with Nutmeg, the digital wealth manager. They are particularly intended for people who are considering taking the first step into investing.
This year is down on the first half of 2019/20 when profit before tax was £192m because of a one-off gain from the closure of the defined benefit pension scheme, the business said.
Online sales now stand at 17%, up from 11% a year ago but back slightly from 20% in March this year. Waitrose was the only supermarket in growth and was the fastest growing online supermarket since the pandemic began, according to Kantar.
At John Lewis' main retail business, compared to 2019/20, margins remained subdued as sales in lower margin categories remained higher than before the pandemic and inflationary pressures in global freight pushed up costs.
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