John Lewis’ H1 revenue up 5%, but profits hit by EPR and National Insurance costs
What: Despite higher sales and customer satisfaction, John Lewis Partnership reported a widened operating loss due to EPR packaging levy and National Insurance costs.
Why it is important: John Lewis’s experience reflects a broader industry challenge, where regulatory and cost pressures are forcing retailers to rethink growth and loyalty strategies.
John Lewis Partnership reported a 4% increase in sales to £6.2bn for the first half of 2025, with total revenue up 5% to £5.4bn. However, profitability was significantly impacted by the introduction of the Extended Producer Responsibility (EPR) packaging levy and higher National Insurance contributions, resulting in an operating loss of £38m compared to a profit of £23m the previous year. The loss before tax and exceptional items reached £34m, with £29m attributed to the EPR levy alone. Despite these financial pressures, the retailer achieved its highest-ever customer satisfaction scores, a 4% increase in customer numbers, and a 13% rise in My John Lewis loyalty scheme registrations. The return of the Never Knowingly Undersold price match scheme in October 2024 helped boost sales and reinforce value perceptions. John Lewis also invested £30m in technology, financial services, and central teams, aiming to strengthen its market position. The partnership is optimistic about full-year profit growth, supported by record seasonal hiring and continued investment in customer experience.
IADS Notes: John Lewis’s results mirror sector-wide challenges reported in June and July 2025, as UK retailers contend with billions in new regulatory costs, including packaging levies and National Insurance increases, which are reshaping profitability and expansion plans. The retailer’s focus on loyalty and customer engagement aligns with the shift seen at Selfridges and Harvey Nichols in May 2025, where experiential and personalised loyalty programs are now critical for sales and retention. Furthermore, John Lewis’s ongoing investment in technology and central teams reflects strategies adopted by H&M and Falabella, who have prioritised digital transformation and operational efficiency to drive growth in a demanding retail landscape.
