Losses at the department store and Waitrose supermarket group John Lewis deepened in the first half of the year as Britain’s best known partnership was hit by higher National Insurance costs and the new packaging tax.
The group made an operating loss of £34 million in the six months to June compared with a £5 million deficit last year. However employee owned JLP insisted the underlying loss was broadly unchanged from last year. At the pre-tax level the loss was £88 million, up from £30 million in 2024.
John Lewis Partnership (JLP) said the results were “significantly impacted by costs not present in the equivalent prior period, including £29 million of costs for the new Extended Producer Responsibility (EPR) packaging levy (where we took the full annual cost in our first half results), alongside higher National Insurance Contributions (NICs).”
The John Lewis department stores and website, which this year celebrates the centenary of its “Never Knowingly Undersold” pledge was £53 million in the red while Waitrose made a £110 million profit.
The EPR was first announced in 2023 but does not come fully into force until October. But it is already being blamed for higher food inflation, which has spiked to around 5%. The bulk of the EPR costs fell on Waitrose.
Higher employer NIC rates were announced by Rachel Reeves in last year’s Budget and came into force in April. The bulk of the EPR costs fell on Waitrose.
Partnership sales grew by 4% to £6.2 billion. Waitrose saw a 6% increase in sales to £4.1 billion while John Lewis sales rose 2% to £2.1 billion
JLP chairman Jason Tarry, who replaced Dame Sharon White in April last year, said: “Our clear focus on accelerating investment in our customers and our brands is working: more customers are shopping with us, driving sales, and helping Waitrose and John Lewis outperform their markets. We achieved our highest recorded levels of positive customer satisfaction, a testament to the great service of our Partners.
“The investments we are making, combined with our plans for peak trading, provide a strong foundation for the remainder of the year. While we are reporting a loss in the first half, we’re well positioned to deliver full year profit growth, which we’ll continue to invest in our customers and Partners.”
His upbeat comments will raise hopes that the staff bonus will make a return next year after no payments since 2022
JLP said that: “While we expect the macroeconomic environment to remain challenging, our momentum, coupled with exciting plans for the second half, sees us well positioned to deliver full year profit growth.”
Robyn Duffy, Consumer Markets Senior Analyst at RSM UK, said: “The recent M&S cyber-attack likely resulted in an unexpected windfall for John Lewis. With M&S’s online functions temporarily unavailable from April to June and stock on shelves significantly impacted, many consumers, particularly those in the overlapping target demographic, would have naturally turned to John Lewis as an alternative.
“The new packaging levy, higher National Insurance contributions alongside a deliberate increase in strategic investment saw John Lewis’ profits dip £3m in the first-half of the year. However, the picture is more stable than the headline suggests. On a like-for-like basis, profitability was broadly flat year-on-year – underlining that the core business remains resilient. “
