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John Lewis Partnership has warned staff that it will probably miss an annual profit target after a lacklustre period in the run-up to Christmas.
The employee-owned retail group, which owns John Lewis and Waitrose, told its workforce that it was unlikely to hit an internal profit target of £131mn for the year to January, and blamed subdued consumer confidence for both chains missing sales expectations in the month to December 21.
The update excludes trading in the Christmas week, when retailers typically make considerable sums of money, but it lays bare the challenges faced by new chair Jason Tarry as he attempts to reinvigorate both brands after a challenging period for the group and continued losses.
It also spells bad news for its 73,000 workers, who are waiting to find out if they will receive an annual bonus when the group shares its annual results in March. The company previously said that it would not pay a bonus unless it hit £150mn in profits after it scrapped the benefit for the first time since 1953 in 2020.
The group has had to contend with the Covid-19 pandemic and a period of high inflation while trying to improve trading amid fierce competition from rivals, as well as criticism that previous chair Dame Sharon White lacked the retail skills to turn the business round.
The group’s former chief executive Nish Kankiwala also warned last year that increases in national insurance contributions announced by the government that take effect in April meant “tens of millions” of pounds in additional costs for the retailer from 2025.
John Lewis Partnership said in a statement that it remained on track to deliver annual pre-exceptional profits higher than the £42mn it reported the previous year — an external target it shared in September.
Its half-year pre-tax loss narrowed by 49 per cent to £30mn in the six months to July 27, from £59mn during the same period the previous year.
The internal trading update was first reported by the Telegraph.
Nick Bubb, an independent retail analyst, said that “if things had been good at John Lewis and Waitrose, we suspect they wouldn’t have kept quiet”, referring to the absence of a Christmas trading update, although the company does not typically share one any more.
Separately, the group has repaid £300mn of debt due this month, according to two people familiar with the matter, which will further strengthen its balance sheet.
The unusual employee-owned structure means management has a limited ability to raise money externally.
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