John Lewis Partnership FY2026: Sales Up 5%, Cash Strong, and a 2% Partner Bonus
The John Lewis Partnership – home to Waitrose and John Lewis – has posted a solid set of unaudited full-year numbers for the 53 weeks to 31 January 2026. The topline grew, cash flow improved, and Partners will get a 2% bonus. Under the bonnet, there is a statutory loss driven by non-cash exceptional charges as the business modernises its tech stack. Here is what matters, why, and what to watch next.
Headline takeaways investors should know
| Metric | FY2026 | YoY |
|---|---|---|
| Partnership sales (incl. VAT) | £13.4bn | +5% |
| Profit before tax, bonus and exceptionals (PBTBE) | £134m | +6% |
| Operating cash flow | £595m | +£63m |
| Operating profit margin (pre-bonus/exceptionals) | 2.1% | Slightly higher |
| Statutory (loss)/profit before tax | £(21)m | vs £97m profit |
| Exceptional charges | £120m | vs £29m |
| Liquidity (incl. £460m undrawn RCF) | £1.6bn | Up from £1.5bn |
| Partner Bonus | 2% | New award |
Note: FY2026 is a 53-week year, so there is an extra week of trading versus FY2025, which flatters growth rates a touch.
Profitability up on an underlying basis, but exceptionals hit statutory results
PBTBE rose 6% to £134m, helped by record customer satisfaction and tighter operations. That is the cleaner profitability measure for this business – it strips out the annual bonus and one-off items. The statutory line, however, shows a £21m loss before tax due to £120m of exceptional charges, the significant majority of which were non-cash write downs of legacy IT systems as the Partnership modernises for future growth.
Two tax headwinds also bit: £13m from the new Extended Producer Responsibility packaging levy and £40m from higher National Insurance Contributions. Management also points to a higher promotional mix as shoppers were cautious into the peak period. The silver lining – operating margin still nudged up to 2.1%, suggesting productivity efforts are landing.
Cash generation and balance sheet: the quiet strength of the year
Operating cash flow rose by £63m to £595m. Liquidity increased to £1.6bn, including a renewed £460m undrawn revolving credit facility. External borrowings remain low, which helps the Partnership continue to self-fund capex. That cash underpin is key – it enabled a 26% uplift in investment into stores, technology and supply chain, plus a 2% Partner Bonus and a £108m step-up in base pay this year.
Why it matters: in retail, cash is freedom. The stronger liquidity gives management room to keep improving the estate and customer proposition without leaning on debt markets – a competitive advantage in a choppy macro backdrop.
Waitrose: volumes up, margins inching higher, and online humming
Waitrose delivered sales of £8.5bn, up 7%, with volumes up 3% and a tenth consecutive quarter of customer growth. The brand posted its highest ever Net Promoter Score, which tends to lead sales. Adjusted operating profit rose to £256m, up £29m, with margin up 16 bps to 3.2%.
- Refreshed the estate – 23 store refurbishments and three new convenience shops.
- Loyalty sharpened – launched Waitrose Little Treats to reward shoppers with money off or free products.
- Online traction – order volumes up 11% and online sales up over 13%.
- Availability at a record 97% thanks to core merchandising system investments.
- Premium trading well – Waitrose No.1 up nearly 30%.
- Supply chain capacity – a new 360,000 sq ft distribution centre in Bristol announced.
My take: this is the engine. Growth in customers and volumes, coupled with operational discipline, is exactly what you want in a food retailer. The margin is still modest, but trending the right way.
John Lewis: steady sales, better margins, and a sharper in-store experience
John Lewis sales reached £4.9bn, up 3%, with record customer advocacy. Adjusted operating profit increased to £58m, up £13m, and margin improved 32 bps to 1.6%. It is progress, if from a low base.
- Store upgrades in Liverpool and Bluewater, plus beauty expansions in Solihull, Welwyn Garden City and Cambridge.
- Award-winning service – topped the 2026 UK Customer Satisfaction Index for retail, with record Personal Styling and Nursery appointments.
- Ship from Store expanded to 28 locations, improving availability for in-demand items.
- Range expanded with 200 new brands, including an exclusive national partnership with Topshop.
- More reasons to visit – six new hospitality venues, taking the total to 62.
My take: the omnichannel model is taking shape. The combination of service-led retail, a broader brand mix, and fulfilment flexibility should support gradual margin recovery. But at 1.6%, profit density needs to keep improving.
Strategic moves: focus sharpened, finance optionality added
The Partnership is exiting its Build-to-Rent property venture, reflecting changed economic conditions since entry. That tightens strategic focus back on retail. Meanwhile, John Lewis Money secured regulatory authorisation as a credit and insurance broker. That opens the door to offer more in-house financial products – a useful lever for customer loyalty and margin, if executed carefully.
On people, the Partnership is investing heavily in pay – £108m this year and £340m over three years – and paying a 2% Partnership Bonus. For a service-led model, motivated Partners matter; the record customer scores suggest the investment is paying off.
The balance of positives and risks
Reasons to be encouraged
- Underlying profit and operating margin both improved despite tax and promotional headwinds.
- Cash generation and liquidity strengthened, supporting self-funded capex.
- Waitrose delivered volume growth and rising margins – a healthy sign in UK grocery.
- Customer metrics hit record highs across both brands.
What could hold things back
- Statutory loss before tax due to £120m of exceptionals – mostly non-cash, but still a drag.
- Higher taxes – £53m of non-like-for-like costs from the packaging levy and National Insurance.
- Promotional intensity remains elevated, pressuring gross margin if consumer caution persists.
- FY2026 includes a 53rd week, modestly boosting reported growth rates.
Outlook: cautious stance, but room to keep investing
Management remains cautious for FY2027 trading, citing the macro environment. Even so, the Partnership heads into the year with improved liquidity, low external borrowings and momentum in customer satisfaction. The plan is to keep investing in the retail-first strategy, which should support further progress in both banners.
Bottom line: this is not a victory lap, but it is another step in the right direction. Underlying profit is up, cash is strong, and the business is modernising – even if that modernisation is painful in the short term through non-cash write downs. Keep an eye on margin progression at John Lewis, volume resilience at Waitrose, and the early traction from John Lewis Money.
Quick jargon buster
- Sales include VAT and certain accounting adjustments – they are total trading sales.
- PBTBE is profit before tax, Partnership Bonus and exceptional items – the key underlying profit measure.
- Operating profit margin here excludes bonus, exceptional items and property gains/losses.
- Liquidity includes available cash plus undrawn facilities – in this case, a £460m revolving credit facility.
