Investing for customers through a challenging market – Unaudited Interim Results

• Partnership sales grew by 2% to £6.3bn in the first half of the year
• Loss before tax and exceptional items (LBTBE) was £89m, compared to £34m last year, reflecting increased investment and a more challenging economic environment
• Customer satisfaction remains strong in our brands as shoppers respond to our investments
• Investment in brands up 29% in H1 to £246m as we stepped up store modernisations
• Cash generated from operations was £131m, down £46m year-on-year, as we accelerated greater investment into the first half
• Liquidity remains strong at £1.4bn, with external borrowings at historic lows
• We are continuing to invest through a difficult economic environment and remain confident our investments are unlocking the commercial opportunity in our brands.

Financial and operational review

Partnership sales were up 2% to £6.3bn in the first half of the year and customer satisfaction remained strong, reflecting the enduring trust in our brands. LBTBE was £89m, compared with a £34m loss a year earlier.

Three dynamics affected financial performance in the half: deliberate choices to invest for the long term; tougher trading conditions, especially in general merchandise; and the increased costs of doing business.

Trading performance across our brands was mixed. We saw good sales momentum in Waitrose but weaker customer demand for larger discretionary purchases impacted John Lewis sales. To help mitigate this, we continued to focus on driving productivity across our business, through both margins and operating costs.

Underlying margin growth was delivered in both brands during the first half. We made deliberate choices to reinvest some of those gains in reducing prices, through direct price investment in Waitrose and targeted promotional and clearance activity in John Lewis. We also invested more in loyalty for customers, notably through Waitrose ‘Little Treats’. Partnership gross margin was +20bps.

During the half we invested more in stores to improve customer experience than in recent years: accelerating our store refurbishment programme; rolling out electronic shelf edge labels; modernising technology, including automation across our supply chains; and investing in inventory management systems to improve availability and reduce waste. Alongside this we are evolving our central structures so we run a simpler head office and protect investment in stores. We’ll see the benefits of these investments build through the second half.

Despite these savings, the cost of doing business increased. Operating costs grew through a combination of rising cost of employment including the annualisation of last year’s National Insurance increase, continued technology modernisation and costs of managing our operations through the heatwaves to maintain levels of service for customers. We increased annual pay by £108m, maintaining our commitment to invest in our Partners. This takes increases in Partner pay to over £400m over the last four years.

Exceptional costs in the half were £35m (2025/26: £54m), primarily restructuring costs relating to head office, as well as costs associated with our Cloud technology modernisation. These take the loss before tax to £124m (2025/26: £88m).

Our strong balance sheet and cash position allow us to keep taking decisions for the long-term. Total liquidity was £1.4bn, external borrowings remained at historic lows and cash generated from operations was £131m (2025/26: £177m). We have invested £246m – up nearly 30% – and remain on course for investing around £600m this year.

Waitrose sales grew 4% to £4.3bn. Adjusted operating profit⁴ was £103m, down £7m, and operating margin was 2.6%, compared to 2.8% last year. This reflects the extra cost of running our operations through the heatwaves and a deliberate choice to increase investment in loyalty and lower prices, which positively affected customers’ experience of the brand. Net Promoter Scores for our loyalty offer increased by 20 points year-on-year. In the half we invested a further £20m in permanently lower prices, and we are investing a similar amount later this month, taking our total investment since 2023 to over £180m.

The Home of Food Lovers strategy is resonating with customers: Waitrose No.1 range sales increased 15%, online sales grew 11% and we launched over 540 new own-brand products across our ranges. We modernised 15 stores – with completed refurbishments already showing improved sales and customer satisfaction scores. Electronic shelf-edge labels reached 225 stores, freeing up Partners’ time to serve customers, and we acquired three new sites, including two full-line supermarkets in Hale Barns and Cricklewood, due to open later this year. We also began work on our first South West distribution centre at Avonmouth, which will create over 550 jobs and will serve around 50 stores from early 2027. For the sixth year running, Waitrose won the Grocer 33 Customer Service Award.

John Lewis sales were £2.0bn, down 2%, as the discretionary market became more challenging. The headline sales figure also reflects more targeted promotional and clearance activity, supported by disciplined stock management, contributing to full-price sales growing by 5.5%, although we still invested more in promotions in response to the subdued market. Adjusted operating loss was £83m, compared to £53m last year, reflecting softer trading, cost growth and our decision to continue investing in the transformation of the brand.

John Lewis is in the earlier stages of that transformation, with encouraging evidence that our investment in our omnichannel offer is making a difference. Stores where we have invested are outperforming the wider estate, demonstrating the value of combining inspiring experiences and Partner expertise with a national omnichannel presence. This year’s £50m store investment programme includes Glasgow, Cambridge, Leicester, Reading and Liverpool.

We introduced over 100 new brands and products, introduced a new Sport and Wellness concept and unveiled our new hospitality proposition, Platter, which will reach 32 cafés and restaurants by the end of 2027. Investments in the half paved the way for a significant refresh of the John Lewis website. Never Knowingly Undersold continues to reinforce our commitment to quality, service and competitive value and John Lewis was named Which? Retailer of the Year for the second year running.

As previously announced, Will Kernan has been appointed Managing Director of John Lewis, succeeding Peter Ruis.

John Lewis Money is part of how we give customers more reasons to choose us. It established itself as a regulated broker in the half and rolled out new panel-backed Home and Car insurance propositions, so customers get greater choice and more competitive pricing, driving long-term customer value across the Partnership.

Outlook

There is no doubt the wider economic and geopolitical landscape has weighed on our customers during the first half and we remain cautious in our outlook for the second half. As in every year, the majority of our profit is earned in the second half, and the full-year outcome will be determined by peak trading.

We are set up well for the second half. We remain focused on doing the right things for our customers and continuing to invest through the cycle. With peak ahead, we are excited about our plans across John Lewis and Waitrose and look forward to making the festive season special for all our customers.