John Lewis group’s no-deal alert as it posts first ever loss
John Lewis Partnership has warned the hit from a no-deal Brexit would be “significant” and impossible to offset as it tumbled to its first ever half-year loss.
The owner of the department store chain and supermarket Waitrose reported underlying losses before tax and staff bonuses of £25.9m for the six months to July 27, against profits of £800,000 a year earlier.
It said that while it was taking actions to prepare for a possible no-deal, it could not entirely protect itself against an expected major impact.
Sir Charlie Mayfield, outgoing chairman of the John Lewis Partnership, said: “Should the UK leave the EU without a deal, we expect the effect to be significant and it will not be possible to mitigate that impact.
“In readiness, we have ensured our financial resilience and taken steps to increase our foreign currency hedging, to build stock where that is sensible, and to improve customs readiness.”
But he warned that Brexit “continues to weigh on consumer sentiment at a crucial time for the sector as we enter the peak trading period”.
His comments came after the Government was forced to release its “worst case scenario” plan for a no-deal Brexit, codenamed Operation Yellowhammer.
It showed that no-deal could trigger medical shortages, food price rises and major cross-Channel trade delays.
Sir Charlie said the group’s noTHE deal Brexit fears centred on the impact on fresh food supply and consumer confidence.
The group is building stocks where it can in some non-perishable foods, such as wine, olive oil, canned food, as well as frozen items.
Sir Charlie said trading conditions had “worsened” in 2019 and would continue to be challenging over its peak sales period as Brexit takes its toll.
The group was driven to a half-year loss for the first time on record by widened operating losses at its John Lewis department store chain, which increased to £61.8m from £19.3m a year ago as it suffered falling sales, surging costs of an IT overhaul and increasing cost inflation.
Like-for-like sales fell 2.3% across the department stores due largely to weaker demand for big-ticket home and electrical items.
Waitrose performed better, with underlying earnings increasing 14.7% to £110.1m, though comparable sales edged 0.4% lower.