John Lewis Partnership blames tax changes as first-half losses widen but eyes strong Christmas

The John Lewis Partnership reported a widening first-half pre-tax loss of £88 million for the six months to July 26, up from a £30 million loss a year earlier, and attributed much of the deterioration to last year’s Budget measures including a new packaging levy and higher National Insurance contributions.

Despite the deeper loss, the employee-owned retailer and supermarket group said underlying sales rose 4% to £6.2 billion in the period, with Waitrose delivering a record performance of £4.1 billion, up 6%, and John Lewis department stores up 2% to £2.1 billion. Partnership executives said they remain upbeat about trading into the crucial Christmas season.

The group said the packaging levy, introduced under the extended producer responsibility regime, shifted the cost of recycling from local authorities to manufacturers and retailers and cost the Partnership about £29 million in the period. Higher employer National Insurance contributions were also cited as a material headwind.

Chairman Jason Tarry, who joined last year after a spell at Tesco, said the Partnership is focused on improving product ranges and customer propositions and that management expects to make progress into the year-end trading period. “If we keep doing the right things for customers, things that they want to see, and evolve and improve our propositions, we think that we can continue to progress, particularly going into Christmas,” he said.

Peter Ruis, managing director of John Lewis, said promotional planning for the festive season will seek to lift spirits as consumers “look to get away from the doom and gloom.” The Partnership highlighted likely best-sellers including card games, toy brands and kitchen appliances, and said it is investing in fashion lines to compete with rivals such as Next and Marks & Spencer.

The group employed about 66,000 people and said it had invested £191 million in the first half, including the rollout of new beauty halls across the country. It also reinstated its historic price‑matching pledge, “never knowingly undersold,” which was reintroduced by Ruis after being scrapped in 2022.

Management said it is too early to confirm whether staff will receive a first partnership bonus in four years. The Partnership’s statement tied the decision to full-year performance and the broader trading outlook.

Executives used the results update to renew calls for reform of the business rates system, urging the Chancellor to prioritise changes ahead of the Budget in November. Tarry said business rates remain the largest cost after staff pay for many retailers and flagged concerns about proposed changes that could increase taxes on larger properties.

The British Retail Consortium has warned that proposed reforms could force the closure of hundreds of large shops and cost tens of thousands of jobs. BRC chief executive Helen Dickinson said excluding large retailers from a higher business‑rates band would protect high streets without reducing Exchequer revenue, and cautioned that failure to act could lead to “emptier high streets and less revenue for the Exchequer.”

Analysts and trade bodies have pointed to the combination of new environmental levies, higher employment taxes and escalating property-related costs as squeezing margins across the retail sector, particularly for food retailers that have absorbed the cost of recycling under the new regime.

While the Partnership’s losses deepened, its sales growth at Waitrose underpinned a relatively resilient trading picture, and executives said they expect to maintain investment to support long-term recovery. The group will report further detail with its full-year results and continues to monitor consumer confidence and the policy environment ahead of the November Budget.