John Lewis says tax changes widened first‑half losses and urges business rates reform

John Lewis Partnership reported a pre‑tax loss of £88 million for the six months to July 27, a widening from a £30 million loss in the same period last year, and said new tax and regulatory costs had materially added to pressures on the business.

The employee‑owned retailer attributed around £29 million of the deterioration to the Extended Producer Responsibility (EPR) packaging levy, which shifts the cost of recycling from councils to producers, and cited higher employer National Insurance Contributions. Chief executive Jason Tarry said the group was pushing the government for meaningful reform of business rates, which he described as the company’s largest cost after staff pay.

Tarry told media outlets that investments made in the business together with plans for peak trading provided a foundation for the remainder of the year and left the group well positioned to deliver full‑year profit growth. He said partners at Number 11 had met with the chancellor to press for business rates reform and described the discussion as constructive, adding the company would "react accordingly" when the government lays out further details.

The partnership, which employs about 66,000 people, said it was too early to confirm whether staff would receive a bonus for the first time in four years. Any bonus will depend on the group’s performance in the current half, it said, noting the business traditionally performs better in the second half because of Black Friday and the Christmas trading period.

Sales in the first half rose 4 percent to £6.2 billion as customers responded to a relaunch of the chain’s long‑running price promise, reinstated last year. The group also invested £191 million in the period, opening new beauty halls and rolling out product and store initiatives aimed at recovering market share from competitors such as Next and Marks & Spencer.

Peter Ruis, managing director for John Lewis, said customers faced considerable cost pressures from energy and general inflation, but pointed to market research suggesting the typical John Lewis customer appeared slightly more confident entering the autumn and Christmas period, helped in part by recent mortgage rate reductions.

The wider retail sector has signalled weaker consumer sentiment in recent weeks, with chains including Greggs, JD Sports and Primark flagging tougher trading conditions. John Lewis returned to profit last year after several years of losses following the pandemic and a cost‑cutting programme, but this first half indicates renewed headwinds as policy changes bite.

The EPR, introduced last year, requires producers to fund the collection and recycling of packaging and has been controversial across retail and consumer goods sectors. In addition to the EPR charge, the partnership cited increases in employer National Insurance Contributions as contributing to the higher cost base.

Tarry warned that proposed changes to business tax settings could hurt retailers occupying larger properties and said reform of the tax should be a priority for the sector. He emphasised the group would continue to invest in customers and partners while seeking measures that reduce fixed property‑related costs.

The company’s statements framed the results as part of an ongoing turnaround. Management highlighted the potential for stronger second‑half trading and reiterated plans to focus spending on customer experience and product ranges, while acknowledging short‑term uncertainty over profitability and partner rewards.