John Lewis profits halved after costly restructure

Iain Gilbert WebFG News | 14 Sep, 2017 10:03 - Updated: 10:03 | | |

John Lewis, retail

UK-based retail group John Lewis announced on Thursday that it had seen its profits cut in half during its first six months of trading as it was hit hard with costs from the reorganisation of its business model.

John Lewis said its pre-tax profit dropped 53% to £26.6m for the six months leading up to 29 July, mostly due to a £56.4m charge it incurred from restructuring and redundancy costs in the half.

John Lewis itself posted a 10% bump in operating profits, but at its Waitrose branded stores operating profits took an 18% dive due to higher costs and tighter margins.

"The reason our profits are down is predominantly because of margin, and cost prices are rising. It's a very competitive market, retail prices are not rising as fast," said Sir Charles Mayfield, chairman of the John Lewis Partnership.

Mayfield noted that inflation was sending costs higher for the group but John Lewis could absorb those costs "for a while" thanks to healthy cash reserves.

When discussing the costly reorganisation with the BBC on Thursday, Mayfield said that the firm hadn't "hunkered down in a difficult market - Instead what we've done is we've pressed on with some really important changes that are going to make the business fit for the future."

"While it's been a difficult first-half, our sales have still been up, our profits are down, but we've made some really important progress for the future," he added.

John Lewis' net debt dropped 28.4% to £317m from last year.

More news

17 Nov Europe close: Stocks slip going into the weekend

Stocks reversed early gains as investors opted to play it safe going into the weekend and the euro edged a tad higher on the back of the political gyrations on Capitol Hill.

17 Nov Europe open: Stocks start slightly higher, analysts wary

Stocks have started the morning trading slightly higher, tracking overnight gains on Wall Street but analysts are worried about buying into Thursday's bounce.

17 Nov London close: Stocks finish week on down note

London's top flight index slipped on Friday, but managed to finish well-off its lows of the session despite renewed Brexit angst as the pound gave back early gains.

17 Nov Kingfisher gets RBC upgrade as 'reasons to be cheerful' in France

DIY retailer Kingfisher has more "reasons to be cheerful" thanks to an improving French outlook, analysts at RBC Capital Markets said on Friday, while clothes seller Supergroup remains "compelling" but its shares have gained a lot in recent weeks.

17 Nov NAV on the rise as Alpha Real Estate Trust turns focus to build-to-rent market

Real estate investment group Alpha Real Trust saw its net asset value (NAV) rise in its first half of trading as it moved to make further investments in build-to-rent projects.

17 Nov Pacific Industrial & Logistics completes sale of Bedford asset

Industrial and logistics-focussed real estate investment trust Pacific Industrial & Logistics has completed the sale of an asset located at Hammond Road, Bedford, for a total consideration of £5.8m, it announced on Friday.

17 Nov DP Poland cuts ribbon on 50th Polish Domino's store

DP Poland, which holds the exclusive master franchise for the Domino’s Pizza brand in Poland, celebrated the opening of its 50th location in the country on Friday.

17 Nov Mercia Technologies makes new investment into Aston EyeTech

National investment group Mercia Technologies has made a new direct investment into Aston EyeTech - a spinout from Aston University, Birmingham - which has developed a range of proprietary hardware and software products in ocular care, it announced on Friday.

17 Nov SimiGon receives final approval for $2m Israeli Air Force order

Modelling, simulation and training solutions provider SimiGon has now received final regulatory approval for a $2m purchase order received from the Israeli Air Force, initially announced on 20 June 2016, it confirmed on Friday.

17 Nov Agriterra losses grow after 'subdued' interest in corn products

Agricultural investment group Agriterra saw losses widen in the first half of its trading year as subdued demand for its maize flour products slashed revenues by more than a third.