John Lewis Partnership released its half-year results today, September 12, reporting a pre-tax £26m loss and warning about the significant impacts posed by the threat of a no-deal Brexit.
In last year’s half-year report the company announced a profit of £800k, and today’s results mark John Lewis Partnership’s first ever half-year loss.
The results serve as a barometer for the impact of a no-deal Brexit on the wider retail industry. The department store topped YouGov’s UK Brand Health rankings, released in August, suggesting that customer confidence in beloved high-street brands does not exempt successful companies from the fallout of the current unsettled political landscape.
Outgoing chairman Sir Charlie Mayfield commented on the impact of a no-deal Brexit: “Should the UK leave the EU without a deal, we expect the effect to be significant and it will not be possible to mitigate that impact.
“In readiness, we have ensured our financial resilience and taken steps to increase our foreign currency hedging, to build stock where that is sensible, and to improve customs readiness. However, Brexit continues to weigh on consumer sentiment at a crucial time for the sector as we enter the peak trading period.”
The report ascribed its half-year losses to widened operating losses at John Lewis, which increased to £61.8m from £19.3m last year. These included falling sales from subdued consumer confidence, IT system upgrades, and cost inflation well ahead of the level of sales growth.
However, the company indicated it had strengthened its balance sheet position, reporting that its total net debts had reduced by £469.2m compared to July 2018. This was due to strong cash generation and tight cash management, as well as the decision to close its final salary defined benefit pension scheme.
It was announced in June that Sharon White will become the sixth Chairman of the John Lewis Partnership, and the company’s first ever female chairman. Mayfield said in today’s report that White will take up her position in early 2020.