UK's John Lewis sinks to loss as cost of living crisis weighs

By James Davey

LONDON (Reuters) -Britain's John Lewis Partnership reported a loss for the first half of the year and warned that the outlook for the rest of 2022 was highly uncertain due to the impact of the cost of living crisis on discretionary spending.

The employee-owned group, which runs John Lewis department stores and the upmarket Waitrose supermarket chain, on Thursday logged a loss before tax and exceptional items of 92 million pounds ($106 million) in the six months to July 30. That compares with a profit of 69 million pounds in the same period last year.

It said that while department store sales were up 3% on a like-for-like basis to 2.1 billion pounds, Waitrose sales dropped 5% to 3.6 billion pounds.

Britons are seeking savings in the face of soaring inflation, which was 9.9% in August and is expected to rise further this year.

Last week industry data showed the slowest growth in retail sales since the end of COVID-19 lockdowns last year.

UK fashion retailers Primark, ASOS and online supermarket Ocado Retail have all warned on profit this month.

The partnership attributed the loss to higher costs not being fully passed on to customers, the slide in demand, the unwinding of pandemic shopping patterns as well as greater investment in the business.

Despite the loss, the partnership did announce a one-off cost of living support payment of 500 pounds for full-time employees known as "partners".

Sharon White, a former Treasury official who chairs the partnership, said a successful Christmas would now be key for the business.

"We will need a substantial strengthening of performance, beyond what we usually achieve in the second half, to generate sufficient profit to share a Partnership Bonus," she said.

With the partnership hit hard by the pandemic, White set out a five-year recovery plan in October 2020 that included store closures and job cuts but also investment in its online operations.

($1 = 0.8681 pounds)

(Reporting by James Davey; Editing by Elizabeth Piper, Alexander Smith and Edwina Gibbs)