Forecast: John Lewis could slide to FY loss, endangering staff bonus, say analysts

John Lewis Partnership could slide to a loss for the past year in the face of rocketing costs at its Waitrose supermarket arm, according to industry analysts.

It would mean staff at the high-street stalwart, which in Scotland has stores in Edinburgh and Glasgow, would miss out on an annual bonus payout. The retail giant is set to reveal its trading performance for the year to January on Thursday March 16.

The update comes amid a pivotal time for the group during its transformation plan under the leadership of Sharon White, and in 2021, it bounced back to a profit as it saw the first positive signs of the strategy, which saw it close a number of department stores to reduce costs. John Lewis shuttered its Aberdeen store in 2021, while at the end of 2022 it announced a joint venture with Abrdn, the Scottish investment giant, to expand in the residential property sector.

Over the first half of the financial year, it fell to a £99 million loss, saying it chose to "forgo" profitability to help staff and customers amid the cost-of-living crisis. The group showed in September that interim like-for-like sales lifted 3 per cent year on year in the department stores, but fell 5 per cent in its Waitrose stores.

The high-street stalwart, whose branches include one at the St James Quarter in Edinburgh, is set to reveal its FY trading performance on March 16 (file image). Picture: Michael Gillen.

Positive winter trading updates from rivals Marks & Spencer and Next will provide optimism that John Lewis shops will have maintained their steady performance.

The update will come just weeks after Pippa Wicks parted company with the latter’s department store arm, being replaced by current retail direct Naomi Simcock. However, questions remain over Waitrose, particularly given its more upmarket position during much financial pressure for shoppers.

The latest figures from Kantar indicated that Waitrose sales grew 0.7 per cent over the 12 weeks to February 19, below the majority of its rivals and therefore seeing its market share drop to 4.7 per cent from 5 per cent a year earlier.

Retail expert Nick Bubb predicted that John Lewis Partnership could deliver a £50m loss before one-off costs for the year, compared with a £181m profit in the previous year. "It goes without saying that there will be no Partnership bonus on this basis, although the £500 cost-of-living grant given to full-time staff at Christmas will have softened the blow," he said.