John Lewis turnaround plan delayed by two years
John Lewis has pushed back targets for its turnaround plan by two years, even as it hailed early signs that cost-cutting efforts are paying off.
The partnership, which owns both the John Lewis department store chain and Waitrose, said inflationary pressures and the need for more investment meant it was now not expected to deliver on turnaround targets by 2025/26.
Under the five-year partnership plan launched in 2020, John Lewis had pledged to hit £400m profit by 2025.
However, it now expects to hit turnaround targets by 2027/28.
Speaking on BBC Radio 4, Dame Sharon White, chairman of the partnership, said: “There’s a road ahead but lots of positive signs so far. The transformation for the partnership will take time.”
It came as John Lewis casts doubt on whether workers will receive their bonus this year.
Last year marked only the second time in John Lewis’s history that the partnership bonus was axed.
John Lewis said: “Our priorities for investment remain to modernise the business, improve customer service and do more for partner pay, where we can. These demands are significant and take precedence over the partnership bonus.”
However, Dame Sharon said she was “encouraged” by the first-half results.
The partnership revealed losses narrowed by 43pc to £56.2m in the six months to the end of July, with the group having stripped £31.2m of costs out of the business. It expects to cut a total of £100m in costs by the end of the year.
Moves to trim expenditure have included an overhaul of products stocked in Waitrose.
Earlier this month, it emerged that Waitrose was also planning to shake up shifts for its workers after warning staff it was “one of the least productive grocers in the UK”.
It told workers that, for every full-time equivalent partner at Waitrose, it makes a £400 loss every year.
The supermarket is in the middle of a consultation over removing the night shift in some stores and reducing how many hours staff work in others, as part of a bigger push to make sure workers are in stores at the times they are needed.
It comes as Waitrose battles to retain shoppers. In the six months to the end of July, sales were up 4pc at the supermarket, although this was driven entirely by higher prices. Waitrose sold 5pc less in terms of volumes.
Meanwhile, sales at the John Lewis department store chain fell 2pc in the six-month period, amid a slump in demand for “big ticket” purchases such as sofas and technology. Overall, across the John Lewis Partnership, sales were up 2pc at £5.8bn.
Dame Sharon said there were “reasons for optimism”, adding: “Performance is improving.”
The partnership said the coming months will be critical, as John Lewis makes the majority of its profits in the second half of the year over the festive period. It is expecting full-year losses to narrow.