Jason Tarry, chair of the John Lewis Partnership, has warned staff that the employee-owned retail group is heading into a period of lower sales and higher costs, telling colleagues that trading conditions are "really tough" as the business works through its turnaround. The comments were made in an interview with the company's internal magazine last month, ahead of the partnership's half-year results, due on September 10.
Tarry told employees the group "will trade into lower sales and higher costs." He said the team was having to adjust for an immediate future not expected even six months earlier, let alone a couple of years ago. Separately, Tarry said the team was heavily focused on what that meant for adjusting its plan going forward. He described the wider retail environment as highly competitive and dynamic. The John Lewis Partnership had already adopted a cautious outlook for the year ahead, as stated in March. The Strait of Hormuz had largely remained closed because of the conflict in Iran, and elevated oil prices were adding to inflationary pressures affecting retailers and consumers.
The partnership, which owns John Lewis and Waitrose, reported a pre-tax loss of £21mn in the year to January, against a pre-tax profit of £97mn a year earlier, while available liquidity rose to £1.6bn. Waitrose sales increased 7 per cent to £8.5bn, and John Lewis sales rose 3 per cent to £4.9bn over the same period.
Tarry said the partnership was holding its nerve on margin improvement and firm stock control rather than chasing top-line sales, even as conditions remained difficult. Tarry joined the partnership two years ago after running Tesco's UK business, and has refocused the group on its core retail operations, scrapping a rental homes project launched by his predecessor, Dame Sharon White. Under his leadership, Waitrose has shown improved performance, while John Lewis has continued to face the longstanding pressures affecting department stores. A person close to the retailer said Tarry was not planning any major strategic changes.
Tarry also said the business was taking the cash it generates and investing it back into itself, something it had not been able to do consistently over the previous 15 years. He referred to technology and artificial intelligence as part of a "fourth industrial revolution." John Lewis said trading conditions were challenging as customers thought carefully about their spending, and that the group was continuing to invest significantly in its brands, including new and refurbished Waitrose shops and fresh formats at John Lewis, such as new beauty and sports halls and its Platter hospitality offer.
The partnership is scheduled to report its half-year results on September 10.
