John Lewis PLC H1 2025/26: Sales Up, Loss Deepens as Investment and New Taxes Bite
These are the unaudited interim results for John Lewis plc (not the broader John Lewis Partnership). The half covers the 26 weeks to 26 July 2025. The headline is simple: sales grew, cash generation strengthened, and customer metrics hit records – but heavier investment and new regulatory costs pushed the company to a larger first-half loss.
Key numbers investors should know
| Metric | H1 2025/26 | Change/Comment |
|---|---|---|
| Total trading sales | £6.2bn | Up 4% year-on-year |
| Revenue | £5.446bn | Up 5% (2024: £5.195bn) |
| Cash generated from operations | £176m | +£32m year-on-year |
| Investment in the half | £191m | Further uplift planned in H2 |
| Loss before tax and exceptionals (LBTBE) | £33m | Worse than last year (£4m) due to new costs |
| Statutory loss before tax | £87m | Includes £54m exceptional charges |
| Total liquidity | £1.5bn | Cash £806m, short-term investments £248m, undrawn RCF £460m |
| Net debt | £1,237m | January 2025: £1,210m |
What drove the loss despite rising sales?
LBTBE – loss before tax and exceptional items – was £33m. Management highlights two non-like-for-like hits: a £29m Extended Producer Responsibility (EPR) packaging levy, taken for the full-year cost in H1, and higher National Insurance Contributions. On a like-for-like basis (stripping out those new taxes), the H1 LBTBE was broadly flat versus last year’s £4m loss, even after a planned £30m step-up in strategic operating costs for technology, financial services and central teams.
Statutory loss before tax was £87m, reflecting £54m of exceptional items. These include £39m of non-current asset write-offs and a £6m charge for cloud migration, plus restructuring and estate actions.
Customer momentum looks real
John Lewis plc says customer satisfaction hit its highest recorded level, and both Waitrose and John Lewis outperformed their respective markets. Customer numbers were up 4%, with loyalty schemes also growing – My Waitrose up 6% and My John Lewis up 13%. That matters because repeat visits and basket size typically follow improved loyalty engagement.
Waitrose: £4.1bn sales and volume growth
Waitrose was the engine in H1. Sales rose 6% to £4.1bn with volumes up 3%, and almost all of the growth was like-for-like (growth from existing stores rather than new openings). Adjusted operating profit was £110m, down £3m year-on-year as tax changes and NIC increases offset margin progress and productivity gains. The EPR levy alone accounted for £22m of incremental costs.
Operationally, the grocer invested in quality and availability, winning The Grocer Gold Award for Customer Service for the fourth consecutive year and, for the first time, the Product Availability award. Seven major refurbishments, one new convenience store and two new Welcome Break shops were completed, with a new distribution centre announced.
John Lewis: sales up, margins under near-term pressure
Department store sales grew 2% to £2.1bn. The business leaned into value and service, refreshed stores (notably Liverpool), expanded omnichannel options like deliver-from-store and rapid delivery, and reinstated the 100-year-old Never Knowingly Undersold promise last year. Customer sentiment scores were the highest on record and the brand was rated best retailer by Which? and the UK Customer Satisfaction Index.
Near term, the mix has shifted toward Technology and Beauty, which carries lower gross margins, and investment continued. Adjusted operating loss was £53m, down £4m year-on-year (2024: £49m), including £7m of EPR costs and higher NICs. Management is targeting peak trading to monetise the improved proposition.
Balance sheet, cash and funding: capacity to invest
Cash generated from operations rose to £176m. Liquidity stood at £1.5bn, comprising £806m of cash, £248m of short-term investments and a newly renewed, undrawn £460m revolving credit facility with five-year tenure. This supports the higher H2 investment plan and peak trading build. Net finance costs improved slightly to £50m (2024: £53m).
Net debt was £1,237m, broadly stable versus January. Pension obligations increased to £398m (January 2025: £363m), driven by actuarial movements, a point to watch but not unusual given rate and asset market shifts.
Exceptional items explained
- Non-current asset write-offs: £39m – removal of legacy intangibles and property, plant and equipment with no continuing value.
- Cloud technology modernisation: £6m – first-half charges from a three-year programme exiting data centres.
- Productivity and physical estate actions: £9m combined – restructuring and distribution network changes.
While these are painful in the short run, they align with the strategy to simplify operations, modernise tech and tidy the asset base.
Outlook: confidence into peak, but execution risk remains
The business expects full-year profit growth, leaning on momentum in sales, loyalty and satisfaction, plus productivity savings. H2 is the profit-heavy period – particularly for John Lewis – so delivery through peak is crucial.
The going concern statement is pragmatic: a modelled severe downside would create covenant pressure, but the company lists mitigations under management control (deferring projects, discretionary spends, and marketing). Liquidity is strong and the RCF is undrawn.
Why this update matters for investors
- Top-line outperformance: Both banners beat their markets, with Waitrose showing volume growth – a clean signal of consumer traction, not just inflation.
- Quality of loss: Much of the LBTBE step back reflects new non-like-for-like taxes and front-loaded investment. Strip those out and underlying profitability is broadly stable year-on-year.
- Cash discipline: Higher operating cash and a £1.5bn liquidity stack offer room to keep investing without tapping markets.
- H2 leverage: The strategy needs to show up in peak trading. If customer momentum converts to margin and operating leverage, full-year profit growth is achievable.
My take: steady progress, justified spend, and a high-stakes peak
There is a lot to like in these numbers: sales up 4% to £6.2bn, revenue up 5%, and record customer satisfaction. Waitrose is clearly in better shape, and John Lewis is rebuilding relevance with service and value, even if mix is pinching margins today.
The negatives are visible too: a statutory loss of £87m and £54m of exceptionals won’t win hearts, and the EPR levy and NIC increases have materially dented H1 profit. But the spend is purposeful – store upgrades, digital capability, and supply chain modernisation – and the balance sheet looks able to fund it.
Bottom line: this is a classic retail rebuild. If the elevated H2 investment lands, and peak trading meets plan, full-year profit growth is on the cards. Miss peak, and the narrative gets tougher. For now, the customer momentum and liquidity give John Lewis plc a credible runway.
Jargon buster
- Total trading sales: headline sales including VAT and certain accounting adjustments.
- LBTBE: loss before tax and exceptional items – a proxy for underlying profit performance.
- EPR packaging levy: a new UK cost for packaging waste responsibility; John Lewis took the full annual cost in H1.
- Like-for-like: growth from existing stores and channels, excluding new space.
- Adjusted operating profit: operating profit before exceptional items and property disposals.
- Liquidity: cash, short-term investments and available committed facilities.
