John Lewis and Waitrose profits slip as Morrisons recovers

Pre-tax profits at the group behind John Lewis and Waitrose have fallen by 15%, while Morrisons is improving with a 14% rise.

The two companies reported contrasting results for the six months to the end of July this morning, with the John Lewis Partnership (JLP) warning of a slowdown in its strong run of growth and Morrisons hailing the progress of its new management team.

JLP reported gross sales growth of 3.1% to £5.27 billion, with both Waitrose (up 2.2%) and John Lewis (up 4.5%) growing market share and customer numbers.

However, it sounded a note of caution on "deep structural changes in the retail market" impacting profits, which fell 14.7% to £81.9 million on a pre-tax before exceptional items basis.

It took a £25 million writedown on property after deciding to slow Waitrose’s expansion around the country in favour of strengthening the appeal of its existing stores.

At John Lewis total sales made through stores fell 1% and the proportion of sales made online grew from 30.6% to 34.5%.

John Lewis said: "Against this backdrop we remain committed to delivering our strategy and the first half saw record capital investment in the essentials of omnichannel trading as we go into our most important peak trading period.

"The role of fulfilment is underscored by the state-of-the-art, industry-leading campus at Magna Park we will open in September, part of a £150 million investment which will streamline our network to become more productive and deliver better service to our customers."

At Morrisons first half like-for-like sales ex-fuel ex-VAT climbed 1.4% and cost savings helped pre-tax profits rise 13.5% to £143 million.

The supermarket said it was too early to know how the recent referendum result could affect the British economy, but customers told it their food shopping had not changed and it had seen no negative impact on customer sentiment or customer behaviour.

It continued: "There are some uncertainties, especially around the impact on imported food prices if sterling stays at its current lower level. However, our priorities are unchanged, and we will continue to invest in becoming more competitive and improving the shopping trip for customers."

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