John Lewis profits down 40% despite strong sales
Miscalculation of holiday pay led to £47.3m pay-out to employees, counteracting company's sales surge
DESPITE strong sales, John Lewis Partnership's profits fell by nearly 40 per cent in the last six months.
Waitrose, John Lewis's supermarket chain, saw sales rise by 7.8 per cent in the months to July, while department store sales climbed 6.6 per cent. Despite hardship for most of the British high street, John Lewis managed to win market share from rivals in fashion, homewares and electricals as well as groceries, The Guardian reports. Overall sales at the company rose 7.3 per cent to £4.7bn in the first half.
However, the group's half-year pre-tax profits dropped by 38.5 per cent to £68.5m because of miscalculated holiday pay costs and redundancy payments. According to the Daily Telegraph, John Lewis had to pay out £47.3m to employees after the group discovered that for several years it had miscalculated holiday pay for staff who work on Sundays and bank holidays.
There was also a £15m cost for management changes and redundancies at its department stores. John Lewis Partnership's chairman Charlie Mayfield said there were no further plans for widespread job cuts but admitted there would likely be more restructuring, as demand continues to shift away from in-store purchases to online shopping.
The department stores' online sales in the period grew 17 per cent, while Waitrose online sales rose 41 per cent. Mayfield says he expects to see strong sales at Christmas, thanks to the gradual upturn in the UK economy, but he warned that the recovery "will be long and not in a straight line." ·