John Lewis Partnership has issued a warning to staff about its annual profit target, attributing widening losses to increased costs from Labour tax hikes and a new packaging levy. The company's pre-tax losses for the six months ending July 26 significantly widened to £88 million, up from £3 million in the same period last year. These rising costs include a £29 million impact from a new packaging levy and higher National Insurance Contributions.
Despite these financial pressures and a 4% increase in half sales to £6.2 billion, the partnership remains optimistic about a "bumper Christmas." Partnership chairman Jason Tarry acknowledged the fragile consumer confidence ahead of the November Budget. The extended responsibility framework, particularly the new packaging levy, has disproportionately affected food retailers like Waitrose, a John Lewis subsidiary.
Looking at broader financial results, while losses have increased, John Lewis saw its profit before tax, bonus, and exceptional items grow by 6% to £134 million for the full year, up from £126 million in the previous year. This growth was hindered by £53 million in non-like-for-like taxation, comprising £13 million from the Extended Producer Responsibility packaging levy and £40 million from higher National Insurance Contributions. Partnership sales for the full year increased by 5% to £13.4 billion, and operating cash flow was £595 million, up £63 million year-on-year. However, the full-year loss before tax was £21 million, including exceptional charges of £120 million. The company had previously made a loss before tax and exceptional items of £92 million in a half-year period, compared to a profit of £69 million in the same period last year. The outlook for the remainder of the year is highly uncertain due to the cost of living crisis and its impact on discretionary spending, making the Christmas trading period critical.
