Against a strong backdrop of community support provision, John Lewis Partnership recorded a loss before tax of £517m in 2020/21 (to 30th January 2021), compared to a profit before tax of £146m in the previous financial year.
The retailer attributes this loss to exceptional costs of £648m incurred due to the closure of John Lewis' stores during lockdown, plus restructuring and redundancy costs from store closures and changes to the head office.
According to the partnership's chairman, Sharon White, John Lewis' shops are now held on the retailer's balance sheet at almost half the value they were before the recent write-downs. "Before the pandemic we judged that £6 in every £10 spent online with John Lewis was driven by our shops," she says. "The ratio has fallen to £3 in every £10."
The retailer plans to reshape its store estate towards a mix of destination stores and smaller service outlets, and is currently trialling the introduction of John Lewis shopping areas in Waitrose stores in Godalming, Horley, Wallingford, Lincoln and Lymington. "If successful, we will roll out to a significant number of our 331 Waitrose shops," says Sharon. "Our plan is for all the general merchandise in Waitrose shops to be sourced from John Lewis.
"Regrettably, we do not expect to re-open all our John Lewis shops at the end of lockdown, which will also have implications for our supply chain. We are currently in discussions with landlords and final decisions are expected by the end of March."
Thanks to the Government's support through the pandemic, profit before exceptionals was £131m.
"We entered this year with our financial performance already challenged - profits and partner bonus having fallen for the past three years," Sharon continues. "We are having to take very difficult decisions to return the business to a path of sufficient profit of £400m by 2025/26. Last year we closed eight John Lewis stores and seven Waitrose stores that were loss-making, and we are in the process of reducing the cost of our head office by -20%. We have seen limited impact from Brexit so far operationally owing to our advance preparations and the Brexit trade deal. The one area of the business that is temporarily disrupted is deliveries to Northern Ireland and we expect to resume these before the summer."
Johnlewis.com grew significantly, up +73%, accounting for three quarters of the brand’s sales (from 40% before the crisis).
The partnership plans to invest £800m in 2021/22 to support its turnaround (approximately +40% higher than in previous years). Spend will be directed towards areas including digital infrastructure, store improvements, and the updating of major category propositions, including Home.
