The John Lewis Partnership announces its full-year results for year ended 30 January 2021.
The business says it won’t reopen all of its stores after lockdown, but hasn’t made a decision on which ones will remain closed, this should be announced by the end of March.
The retailer said:
‘Hard as it is, there is no getting away from the fact that some areas can no longer profitably sustain a John Lewis store.
‘Regrettably, we do not expect to reopen all our John Lewis shops at the end of lockdown, which will also have implications for our supply chain. We are currently in discussions with landlords and final decisions are expected by the end of March.
‘Closing a store is one of the hardest decisions we can make as a Partnership. We are acutely sensitive to the impact on our Partners, customers and communities, particularly at a time when retail and our high streets are undergoing major structural change.
‘We will do everything we can to lessen the impact and will continue to provide community funds to support local areas.’
The business said in a statement:
In a difficult year, the Partnership recorded a Loss before tax of £(517)m, compared to a Profit before tax of £146m in the previous year. This is the result of substantial exceptional costs of £(648)m, mainly the write down in the value of John Lewis shops owing to the pronounced shift to online, as well as restructuring and redundancy costs from store closures and changes to our head office.
John Lewis shops are now held on our balance sheet at almost half the value they were before this year’s and last year’s write downs. Before the pandemic we judged that £6 in every £10 spent online with John Lewis was driven by our shops. The ratio has fallen to £3 in every £10.
Our Profit before exceptionals was £131m. While this was up £61m on the previous year, the Partnership would have made a loss before exceptionals if it weren’t for crisis-related support from the Government.
We were helped by support from the Government of £190m, which was made up of business rates relief and furlough support (the latter claimed only to July 2020). Government funding has been used for the purpose it was designed for – to protect the business – and was critical to cover the direct operational costs relating to Covid and the substantial hit to trading operating profit.
The business rates relief has helped to keep us running and avoid more severe restructuring of the Partnership, which would have put more jobs at risk at a time when the high street is already under pressure. We are not out of the crisis yet and the economic environment remains extremely uncertain. Therefore, our current intention is to accept the business rates relief made available from April to June, but we will keep this under review.
Trading operating profit was significantly challenged as the improvement seen in Waitrose, in part helped by the closure of the hospitality industry, was insufficient to cover the substantial decline in John Lewis as “non-essential” physical retailing closed temporarily. However, we improved our cost base with pension costs reducing by around £55m following the closure of the Partnership’s defined benefit pension scheme in April 2020. There was also an almost £25m reduction in the depreciation of John Lewis Stores – i.e. less wear and tear – owing to their significantly reduced value in our accounts through the exceptional write down.