John Lewis, the owner of the department store and Waitrose, has expressed criticism of the government's impact on the cost of doing business, as the company's losses have more than doubled in the first half of the fiscal year.
Losses for the six months ending August 1 reached £89 million, a significant increase from the £34 million recorded in the same period last year. Chairman Jason Tarry cited "increased costs of doing business," including the rising expense of employment due to higher National Insurance contributions for employers. Additional costs were incurred from managing operations during recent heatwaves.
Tarry affirmed that a turnaround effort is ongoing and that the employee-owned partnership has prioritized investment in its retail outlets despite financial pressures. Overall group sales saw a modest 2 percent increase to £6.3 billion, with strong performance from Waitrose partially offsetting a decline in sales at John Lewis.
The department store division experienced a 2 percent drop in sales, as consumers showed reluctance to purchase high-value items such as furniture. John Lewis also implemented more promotions and clearance discounts during the period to remain competitive in a "subdued market."
"Our first-half results reflect our continued investment in our transformation, a more challenging trading environment and the increased costs of doing business," Tarry stated. The company traditionally generates the majority of its profits in the second half of the year, particularly during the crucial Christmas trading period, and expressed confidence in its readiness for this upcoming season.
The company's investments in store improvements, including new designs for its Cambridge and Leicester locations, have also impacted profits. These enhancements feature updated beauty halls and the introduction of sportswear brands aimed at younger, health-conscious consumers.
Tarry's remarks on taxation come amid concerns from retailers about potential government plans to increase business rates on large stores. Such a move, reportedly being considered by Prime Minister Andy Burnham and Chancellor John Healey, could fund lower rates for pubs and music venues. Retailers are particularly worried about potential increases to rates for stores with a rateable value of £500,000 or more, arguing that larger businesses are essential to the retail ecosystem.
Former John Lewis managing director Peter Ruis, who recently departed the company, had previously warned of the "terrible impact" such tax changes could have on all retailers, emphasizing the interdependence between smaller and larger stores. The company has been undergoing a revival effort, including reinvestment in its stores and the reintroduction of its historic "Never Knowingly Undersold" pledge, aiming to regain market share lost to competitors like Marks and Spencer.