The John Lewis Partnership, which comprises Waitrose and John Lewis, has reported a return to profit, publishing its unaudited results for the 52 weeks ended 27th January 2024.
Following a "challenging" set of results in 2022/23, profit before tax and exceptional items was £42m, a £120m improvement on the prior year loss of £78m.
Improvement was achieved through a combination of sales growth, gross margin rate improvement and sustainable productivity improvements. PBT was £56m, up from a loss of £234m in 2022/23.
Partnership sales reached £12.4b, up by £176m (+1%) from the year before, while total revenue was up +2% to £10.8b.
Gross margin rate increased by 0.6 percentage points, and customer numbers across the partnership grew by one million, to reach 22.6 million.
Profit growth was supported by a further £111m of productivity improvements in the year. This brings recurring productivity savings since the start of the partnership plan in January 2021 to £420m, on track against the target of £900m by 2027/28.
Net cash generated from operating activities of £433m improved by £201m, due principally to improved profit. "This allows us to step up our investment in transforming our business, increasing investment levels from £312m this year to £542m in 2024/25," explains the partnership.
Staff will not receive a bonus this year, but overall pay will be increased by £116m in 2024, which the partnership describes as "a record investment".
The John Lewis business achieved improved profitability, helped by improved gross margin rate and productivity. Sales were £4.8b, down -4%, and the retailer saw weaker sales in Home and Technology.
John Lewis attracted a record 13.4 million customers.
"Trading operating profit of £689m was £13m better YoY as we converted sales into greater profit," says the partnership. "Gross margin improvement of 1.0 percentage point and efficiency savings across supply chain and stores underpinned this improvement.
"We introduced over 170 new brands. Customers continued to turn to John Lewis for independent, unbiased advice – over 200 of our partners are now dedicated to fashion personal styling (appointments up +27%), nursery (appointments up +25%) and home (appointments up +5%).
"Our customers told us they wanted more ways to spread the cost of their purchases. In response, we launched new payment options for customers wanting to pay in stages. John Lewis remained committed to pricing competitively during the year - ensuring that customers can be confident they are getting great value and service when buying from us.
"We continue to enhance customers’ experience across the John Lewis app and website, making it quicker and easier to shop online for delivery or collection at over 13,000 locations. 53% of our customers use digital channels for their shopping, which demonstrates the importance of our omnichannel offer, with app use a growing component of sales.
"In 2023/24, our focus has been on returning to profitability through improved trading and productivity, while boosting our customer offer. This has been achieved.
"Given the significant changes in the economy since we announced our strategy in 2020, we have refreshed our plan. We’re laser focused on providing a brilliant retail experience for our customers, inspired by our partners. We’re simplifying our business and improving productivity to generate stronger performance, from which we will invest to modernise and energise our unique customer offer.
"In support of our refreshed plan, we are entering a year of significant investment - £542m planned (over +70% up on the year) - much of which will focus on modernising our technology, refreshing our shops and simplifying how we work.
"In John Lewis, we will improve our offer to customers with around 80 new brands and strengthened own-brand, while revitalising our Home category. We’re improving visual merchandising in stores, investing in technology to improve customer service and continuing to invest in value. We will invest in improving our online experience through easier navigation and personalised product recommendations.
"We are investing significantly in training and development, supporting partners in delivering a differentiated experience for customers, with enhanced service training for every Waitrose and John Lewis store partner."
Chairman Sharon White says: “We have made significant progress in the last year to return the business to profitability and delivered results that allow us to increase investment in our retail businesses – we expect profits to grow further this year.
“This shows our plan is working, while we know there’s much more to do. Our improved performance has been supported by our customers’ love for both brands, with more people choosing to shop with us than ever before, and our partners’ commitment to delivering excellent customer service.
“This year we will unashamedly focus on investing back into our retail businesses for our customers, including opening new Waitrose shops and continuing to modernise our brand offering in John Lewis, while prioritising pay for our partners.”
Nish Kankiwala, CEO of the John Lewis Partnership, adds: “I’m grateful for the hard work and dedication of our partners in delivering our return to profit while growing our customer numbers, accelerating the pace of transformation and driving significant improvements in productivity.
“It’s great to see an increasing number of customers embrace our partner-led service and our unique credentials for quality and value, while we deliver exciting new innovations in both Waitrose and John Lewis. I'm very confident in the next phase of our refreshed plan, which will focus on delighting our retail customers, offering excellent service delivered by our partners.”
