John Lewis and Waitrose losses jump after heatwave costs and investment in stores

John Lewis and Waitrose losses jump after heatwave costs and investment in stores The owner of John Lewis department stores and Waitrose admits it is "cautious" ahead of the all-important Christmas period Losses at high street chain John Lewis jumped in the past six months as it was hit by a wave of costs, including the heatwave. The department store and sister chain Waitrose were also driven deeper into the red by investment in its stores, and what it called a "more challenging economic environment". The worker-owned John Lewis Partnership reported losses before tax and exceptional items of £89million for the six months to August 1, up sharply from £34million a year earlier. On a bottom line basis, pre-tax losses widened to £124m from £88m a year ago. That said, the group makes the bulk of its money in the second half of its year, including over the key Christmas period. And it is the retailer's performance over that period that could decide if workers - known as partners - get an annual bonus. However, it said it remained "cautious in our outlook for the second half". Sales in its department store chain fell 2%, to £2billion, as it said shoppers held back on discretionary spending. Takings at Waitrose, on the other hand, rose 4% to £4.3bn. The group's profit was also dented by last year’s National Insurance increase, continued technology modernisation and "costs of managing our operations through the heatwaves to maintain levels of service for customers". The last of those included extra air conditioning in stores and fridges having to work harder to keep food and drink cool. Jason Tarry, chairman of the JLP, said: “Our first-half results reflect our continued investment in our transformation, a more challenging trading environment and the increased costs of doing business. "Partnership sales grew, customer satisfaction remains strong and the stores we’ve transformed are outperforming the rest of our estate. That gives us confidence in the commercial headroom for both Waitrose and John Lewis. “We are managing the business with discipline and have chosen to keep investing in our customers, Partners and the long-term strength of our brands. While losses grew in the half, our employee-owned model allows us to take that longer-term view, supported by our financial strength. As in every year, our profit is earned in the second half so our focus now is on serving customers brilliantly through our peak trading period. I’m grateful to all our Partners for everything they continue to deliver.” Robyn Duffy, consumer markets senior analyst at RSM UK, said: “Elevated prices, borrowing costs and uncertainty around the jobs market are making John Lewis’ core customers, of middle and higher-income families, increasingly cautious. "The retailer is particularly exposed to big-ticket, deferrable categories like home, furniture and electricals - exactly where these consumers are choosing to cutback or delay spending. “Profitability is also being squeezed from both sides, with softer demand alongside higher employment and technology costs. At the same time, the Partnership is continuing to invest through the downturn, increasing investment by almost 30% as it modernises stores, technology and its customer offer. The challenge will be ensuring that investment translates into stronger sales with consumer confidence still fragile. “For Waitrose, the picture is more encouraging. Growth in its premium No.1 range shows consumers are still willing to trade up where they see quality and value, while investment in convenience and prepared food is helping it compete more directly with M&S. The next challenge for Waitrose is its store estate. Refurbished stores are already seeing stronger sales and customer satisfaction, but the business needs to accelerate that modernisation to keep pace with M&S. For a premium grocer, the store experience needs to feel premium too.”