John Lewis Partnership chair is confident in the group's ability to bounce back during Q4
What: John Lewis Partnership reported sales growth but swung to a loss due to regulatory costs, while investing heavily in store upgrades, expanding its fashion portfolio, and preparing for peak trading with major seasonal hiring and a renewed focus on staff compensation.
Why it is important: Chair Jason Tarry says they are taking the long-term view. This highlights the critical balance between operational investment and cost pressures, reflecting how retailers are adapting compensation and recruitment strategies to sustain growth.
John Lewis Partnership’s first-half results reveal a business navigating the dual pressures of rising regulatory costs and the need for continued investment. Despite a 4% year-on-year sales increase to £6.2bn and a 2% rise at John Lewis stores, the group reported an operating loss of £38m, with pre-tax losses nearly tripling to £88m, largely due to the new EPR packaging levy and higher National Insurance contributions. The company absorbed a £29m EPR cost and made its largest investment since 2017, allocating £191m primarily to store maintenance and digital transformation, including cloud migration and major refurbishments. The retailer’s strategy also includes onboarding over 100 new fashion brands, such as Vivienne Westwood and Topshop, to strengthen its appeal and drive market share. Operationally, John Lewis is hiring 13,000 employees for the golden quarter and remains committed to reinstating staff bonuses, reflecting a broader shift in compensation strategy. Leadership remains confident that these investments and customer-focused initiatives will underpin a strong performance during the crucial peak trading period.
IADS Notes: John Lewis’s experience reflects sector-wide challenges, with June 2025 reports noting £7 billion in new regulatory costs impacting UK retailers’ profitability. The company’s £800 million investment in store and digital transformation since October 2024 has supported its aggressive brand expansion, including 49 new fashion brands and exclusive collaborations by July 2025. Operational responses, such as the record seasonal recruitment drive and evolving compensation strategies, mirror broader industry shifts observed in June and July 2025, as retailers balance investment, workforce management, and cost pressures.
