John Lewis Partnership, the employee-owned group behind John Lewis department stores and Waitrose supermarkets, reported on Thursday 10 September that its first-half loss more than doubled, even as group sales edged higher. The loss before tax and exceptional items widened to £89 million (about USD 121 million at around USD 1.36 per pound) for the 26 weeks to 1 August 2026, from £34 million a year earlier, according to the Partnership’s unaudited interim results. On a statutory basis, the pre-tax loss reached £124 million (about USD 169 million), up from £88 million.
The numbers matter well beyond Victoria Street. The Partnership is the largest employee-owned business in the UK, its two brands anchor high streets and retail parks from Aberdeen to Exeter, and its half-year statement is one of the clearest readings available of how the middle-income British shopper is behaving heading into the Christmas quarter. The message from chairman Jason Tarry was blunt: customers are cautious, big-ticket purchases are being deferred, and the cost of employing people in British retail keeps climbing.
In short
- Loss doubles: loss before tax and exceptionals of £89m for the half to 1 August 2026, against £34m a year earlier; statutory pre-tax loss of £124m versus £88m.
- Two brands, two stories: John Lewis sales fell 2% to £2.0bn and its adjusted operating loss widened to £83m; Waitrose sales rose 4% to £4.3bn with adjusted operating profit of £103m.
- Investment stepped up: £246m spent in the half, up 29%, with roughly £600m planned for the full year across shops, technology and supply chain.
- Cost squeeze: a £108m Partner pay rise, the annualised employer National Insurance increase, restructuring and summer heatwave costs all weighed on the result.
- Cautious on Christmas: Tarry says the Partnership is “well prepared” for the festive period but “remains cautious” on the second half, when the majority of its profit is earned.
What did John Lewis Partnership actually report?
The headline figures are straightforward, and the official release lays them out in a form that makes year-on-year comparison simple. Partnership sales grew 2% to £6.3 billion (about USD 8.6 billion). Within that, Waitrose contributed £4.3 billion, up 4%, and John Lewis contributed £2.0 billion, down 2%. The loss before tax and exceptional items came in at £89 million, compared with a £34 million loss in the same period of 2025.
Below the adjusted line, the Partnership booked £35 million of exceptional charges, which it attributed to restructuring and to a cloud modernisation programme for its legacy technology estate. That took the statutory loss before tax to £124 million, from £88 million. No Partnership Bonus was accrued for the half, which is normal practice: the bonus decision is taken at the full-year stage in March.
| Metric (26 weeks to 1 August 2026) | H1 2026/27 | H1 2025/26 | Change |
|---|---|---|---|
| Partnership sales | £6.3bn | £6.2bn (approx.) | +2% |
| Waitrose sales | £4.3bn | £4.1bn (approx.) | +4% |
| John Lewis sales | £2.0bn | £2.0bn (approx.) | -2% |
| Waitrose adjusted operating profit | £103m | £110m | -£7m |
| John Lewis adjusted operating loss | £83m | £53m | -£30m |
| Loss before tax and exceptionals | £89m | £34m | -£55m |
| Exceptional items | £35m | n/a | restructuring, cloud |
| Statutory loss before tax | £124m | £88m | -£36m |
| Investment | £246m | £191m (approx.) | +29% |
| Cash from operations | £131m | £177m | -£46m |
Source: John Lewis Partnership interim results, 10 September 2026. Prior-year sales figures are derived from the reported percentage changes and rounded.
Cash generation softened too. Cash from operations fell by £46 million to £131 million, reflecting the weaker trading result and the heavier investment programme. The Partnership stressed that liquidity stands at £1.4 billion and that external borrowings sit at historic lows, which gives it room to keep spending through a difficult period without returning to the debt markets. That balance-sheet position is the reason it can describe a doubled loss as a planned consequence of investment rather than a crisis.
Why did the loss more than double?
Three things happened at once. First, the Partnership chose to spend more: investment rose 29% to £246 million in the half, and the depreciation and running costs of that spending flow straight into the profit and loss account before the benefits show up. Second, the cost of doing business in the UK rose sharply for reasons outside its control. Third, John Lewis, the department store arm, sold less and lost more money than a year earlier.
Tarry’s framing in the official statement captured all three in one sentence: “Our first-half results reflect our continued investment in our transformation, a more challenging trading environment and the increased costs of doing business.” Speaking to reporters, per PA Media, he added that “consumers are holding back on spending on bigger ticket items. They’re cautious at the moment given what’s going on in the world.”
The employment cost line
The single largest identifiable cost item is people. The Partnership put £108 million into Partner base pay during 2026, taking its cumulative investment in pay over four years to more than £400 million. That sits on top of the increase in employer National Insurance contributions introduced in April 2025, which raised the rate to 15% and cut the threshold at which employers start paying to £5,000 per employee. Because the NI change took effect part way through the prior year, the full annualised effect only lands in the current period, which is why the release refers to “National Insurance annualisation” as a pressure.
The National Living Wage rose again in April 2026, to £12.71 an hour, according to the Low Pay Commission’s confirmed rate. The Partnership pays above that floor, but the statutory rise lifts the whole pay structure beneath it. This is the same squeeze that the British Retail Consortium has warned about for two years, and one that has already prompted UK retailers to cut around 18,000 jobs as the tax rises annualised across the sector.
Restructuring, weather and technology
Two smaller items added to the drag. A head-office reorganisation, which the Partnership said affected less than 1% of its total workforce, generated restructuring charges. And the summer heatwaves imposed operational costs on Waitrose in particular, from refrigeration load to disruption in fresh supply chains, according to the results commentary reported by Retail Bulletin. The £35 million exceptional charge captures the restructuring cost together with the cloud migration of legacy systems, following £120 million of largely non-cash technology write-downs booked in the full-year accounts published in March.
How is Waitrose performing against the other grocers?
Waitrose remains the profit engine, and its half was respectable rather than spectacular. Sales grew 4% to £4.3 billion. Adjusted operating profit slipped by £7 million to £103 million, leaving an operating margin of 2.6%, which the release attributes to deliberate investment in loyalty pricing and price reductions rather than to any loss of momentum. Online sales rose 11%, the premium No.1 range grew 15%, and more than 540 new own-brand products were launched in the period.
A 4% sales rise puts Waitrose slightly ahead of the market leaders on growth. Sainsbury’s reported grocery sales growth of 3.6% in its first quarter, while the discounters continue to expand through new space rather than like-for-like gains. Waitrose’s own customer metrics also improved: loyalty net promoter score rose 20 points year-on-year, and the chain won the Grocer 33 customer service award for a sixth consecutive year.
| Retailer | Latest reported period | UK sales growth | What the figure measures |
|---|---|---|---|
| Waitrose | 26 weeks to 1 Aug 2026 | +4% | Total sales, per JLP interim results |
| Sainsbury’s | Q1 FY2026/27 | +3.6% | Grocery sales, per Sainsbury’s trading statement |
| John Lewis | 26 weeks to 1 Aug 2026 | -2% | Total sales; full-price sales +5.5% |
| Currys UK & Ireland | 17 weeks to 29 Aug 2026 | +6% | Like-for-like revenue, per Currys trading update |
| Primark (group) | FY to 12 Sep 2026 (guided) | about -2.6% | Like-for-like sales, per ABF trading update; total sales about +2% |
| Next | H1 to July 2026 | due 17 Sep 2026 | Results not yet published |
Sources: company statements and trading updates as reported by Retail Week, Retail Gazette and PA Media. Periods differ; the table compares direction of travel, not like-for-like accounting.
Waitrose is still opening shops
The expansion story is quietly significant for anyone watching British town centres. Waitrose modernised 15 stores in the half and has now rolled out electronic shelf-edge labels to 225 branches. It acquired three new sites, with openings planned at Hale Barns in Greater Manchester and Cricklewood in north London, and it is creating a new distribution centre at Avonmouth near Bristol that the Partnership says will support more than 550 jobs. Against a market where the Competition and Markets Authority is moving to curb Aldi and Lidl land deals that block rival stores, a premium grocer adding sites is a reminder that the grocery estate is still growing at both ends of the price spectrum.
What went wrong at the John Lewis department stores?
John Lewis is the part of the business that shoppers name first, and it is where the pain is concentrated. Sales fell 2% to £2.0 billion and the adjusted operating loss widened from £53 million to £83 million. The release is careful to separate two effects. Full-price sales actually rose 5.5%, which suggests the underlying brand is holding customers who are not bargain hunting. The decline came from big-ticket categories, where shoppers deferred purchases of furniture, large electricals and other discretionary items, and from a decision to run more promotional and clearance activity to keep stock disciplined.
In plain terms, John Lewis sold fewer sofas, beds and televisions, and it discounted harder to clear what it had bought. Both of those hit profit directly. The Partnership’s own diagnosis is external: the fuel price spike earlier in the year, higher inflation expectations and the disappearance of hoped-for interest rate cuts have made a typical John Lewis customer, who is more likely to be a homeowner planning a purchase, hold off. PA Media noted that the period included a rise in fuel prices triggered by the conflict involving Iran from February, which dented consumer confidence across the UK.
Refurbished shops are outperforming
The encouraging data point, and the reason the Partnership is doubling down rather than retrenching, is what happens after a store is refurbished. Tarry said in the release: “Partnership sales grew, customer satisfaction remains strong and the stores we’ve transformed are outperforming the rest of our estate.” A £50 million John Lewis refurbishment programme covers Glasgow, Cambridge, Leicester, Reading and Liverpool, among others, and the group has introduced more than 100 new brands and products into its ranges. John Lewis was also named Which? Retailer of the Year for the second year running.
There was a leadership change alongside the numbers. Will Kernan has been appointed managing director of John Lewis, succeeding Peter Ruis, according to the results announcement. Kernan inherits a brand with 34 shops, strong customer satisfaction scores and a growing hospitality proposition (the Platter café and restaurant format is set to reach 32 sites by the end of 2027), but also an operating loss that has now widened for a second consecutive half-year comparison.
How does this compare with the full-year picture?
Context matters here, because the half-year loss is seasonal by design. The Partnership earns the overwhelming majority of its profit between August and January, when Christmas trading at both brands and the Black Friday period at John Lewis lift sales and margins. The first half is habitually loss-making. The question investors and Partners ask is not whether there is a loss, but whether it is bigger than the plan allowed for and whether the second half can recover it.
For the year to 31 January 2026, published in March, the Partnership reported sales of £13.4 billion, up 5%, and profit before tax, bonus and exceptional items of £134 million, up 6%. Waitrose delivered £8.5 billion of sales and £256 million of adjusted operating profit; John Lewis delivered £4.9 billion of sales and £58 million of adjusted operating profit. On that basis the Partnership paid a 2% Partnership Bonus to staff. A £120 million exceptional charge for legacy technology write-downs turned the statutory figure into a £21 million loss.
Put the two periods side by side and the shape is clear. John Lewis made £58 million in the last full year but has lost £83 million in this first half; that means the department stores would need a stronger Christmas than last year’s simply to match the prior full-year profit. Waitrose’s profit is broadly stable. Whether a Partnership Bonus is paid next March therefore rests almost entirely on the ten weeks from early November to mid-January.
Where does the investment money go?
The Partnership is spending at a pace it has not managed for years. H1 investment of £246 million is 29% higher than a year earlier, and the full-year figure is expected to be around £600 million (about USD 816 million). That covers four broad buckets: shop refurbishments across both brands, the Avonmouth distribution centre and other supply chain work, the technology modernisation programme (including the move from legacy systems to cloud), and product development in own-brand ranges.
For shoppers, the visible parts are the refurbished John Lewis stores, the modernised Waitrose branches with electronic shelf labels and expanded ranges, and the growing Platter hospitality format. For the wider British retail sector, the significant part is the signal it sends. A business that can draw on £1.4 billion of liquidity, that is employee-owned and therefore not answerable to quarterly shareholder returns, is choosing to spend heavily into a downturn. Its peers on the high street generally cannot, as the closure of 19 TG Jones shops this September illustrates at the other end of the market.
Tarry has argued that the ownership model is exactly what makes the long view possible. The release repeats that employee ownership allows the Partnership to invest through the cycle rather than cut to protect a share price. The counter-argument, which Partners themselves will weigh, is that a doubled loss and a bonus that depends on Christmas is a heavy price for patience if the second half disappoints.
What does the cost backdrop look like for UK retailers in 2026?
The John Lewis Partnership numbers are the most detailed expression of a cost story every British retailer is living through. Employment costs moved twice in eighteen months: employer National Insurance rose to 15% with a lower threshold from April 2025, and the National Living Wage rose to £12.71 an hour from April 2026. Business rates changed again from April 2026, when the temporary retail, hospitality and leisure relief ended and was replaced by permanent lower multipliers for smaller shops, alongside a higher multiplier for properties with a rateable value of £500,000 or more.
| Cost driver | What changed | When | Who feels it most |
|---|---|---|---|
| Employer National Insurance | Rate to 15%, threshold cut to £5,000 per employee | April 2025, full annualised effect in FY2026/27 | Labour-heavy chains: supermarkets, department stores, convenience |
| National Living Wage | Up to £12.71 an hour | April 2026 | Every employer at or near the statutory floor; lifts pay bands above it |
| Business rates | RHL relief ended; new lower multipliers under £500,000 RV, higher multiplier above | April 2026 (2026 revaluation) | Large-format stores and flagship city-centre shops on the higher multiplier |
| Fuel and energy | Fuel price spike from February 2026, per PA Media | H1 2026 | Grocers’ logistics; consumer confidence generally |
| Interest rates | Hoped-for cuts receded as inflation expectations rose | Ongoing | Big-ticket, credit-financed purchases such as furniture and electricals |
Sources: HM Treasury and Low Pay Commission announcements as summarised by the Association of Convenience Stores and local authority guidance; PA Media reporting on the JLP results.
For an independent shop on a British high street, the arithmetic is the same as for John Lewis, only without the £1.4 billion cushion. A single full-time employee at the National Living Wage costs materially more in 2026 than in 2024 once wage, NI and pension contributions are added together. The Partnership’s £108 million pay increase is a scaled-up version of a decision every shop owner has faced this year: pay more to keep people, or cut hours and risk service.
What did the Partnership say about Christmas and the second half?
The outlook paragraph is the part of the release that will be re-read most often. It says: “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.” The Partnership nevertheless said it is “well prepared for Christmas”, and that it expects to deliver a profit in the second half. It did not give a full-year profit number.
That combination of caution and confidence is deliberate. The Partnership generates most of its annual profit between August and January, so a weak Christmas would leave the full year in loss and would almost certainly mean no Partnership Bonus. The refurbished stores, the new brands at John Lewis and the expanded Waitrose ranges are all timed to be in place for peak trading. The risk is that the same cautious consumer who deferred a sofa in June does the same with a Christmas television in November.
There is also a competitive dimension. Primark’s decision, announced the same morning, to commit to home delivery in Great Britain via a £90 million automated site in Sheffield shows that the value end of fashion is investing to take share of online spend heading into peak. Primark’s home delivery commitment and John Lewis’s store refurbishments are two answers to the same question: where will the British shopper spend a squeezed Christmas budget, and through which channel?
How did the trade press and the market read the results?
The reaction split along familiar lines. Retail Gazette led on the £89 million figure and the cautious outlook, framing the results as a warning on the second half. Retail Bulletin focused on the £124 million statutory loss and the rising cost base, with employment costs, the National Insurance annualisation and the heatwave singled out. Bloomberg’s headline coupled the deeper loss with “higher costs” and “weak spending”, placing the Partnership within a broader story of British consumer caution. PA Media, whose copy ran across the regional press, emphasised Tarry’s comment that shoppers are “holding back on spending on bigger ticket items”.
Because the Partnership is employee-owned and has no listed equity, there is no share price to register a verdict. Its bonds trade, but the release’s emphasis on £1.4 billion of liquidity and historically low external borrowings is aimed squarely at that audience. For creditors, the key line is not the loss but the cash from operations, which fell £46 million to £131 million, and the investment programme, which is being funded without new borrowing. The Partnership is, in effect, drawing on balance-sheet strength built up during the recovery years to pay for a transformation programme in a year when trading cannot.
What the results do not say
Several things a reader might expect are absent. The release gives no full-year profit guidance, no store-by-store breakdown of the refurbishment uplift beyond the statement that transformed shops are outperforming, and no figure for the direct cost of the employer National Insurance change, which the Partnership references as a pressure without quantifying. It also makes no comment on the Employment Rights Bill, on business rates, or on the broader policy environment, in contrast to the British Retail Consortium’s steady public campaign on those costs. Anyone reading the numbers for a policy signal will need to look at the trade bodies rather than the Partnership itself.
That reticence is consistent with the Partnership’s usual approach, which is to report what it can control and leave lobbying to the BRC. It does, however, leave an information gap between the half-year numbers and the Christmas update in January. Waitrose’s weekly grocery share data from market researchers, and John Lewis’s presence in the Black Friday price comparisons that dominate late-November coverage, will be the only public signals in the meantime.
What should shoppers and high-street businesses take from this?
For shoppers, the practical read-across is about promotions and stock. John Lewis said it ran more promotional and clearance activity in the half to keep stock disciplined. With a cautious outlook and big-ticket demand soft, there is little reason to expect the department stores to hold prices firm through Black Friday. Waitrose, by contrast, is investing in loyalty pricing and its No.1 range, which suggests the focus there is on retaining customers rather than winning them on headline price.
For independent retailers and town-centre businesses, the lesson is about what a well-capitalised competitor is choosing to do. The Partnership is refurbishing shops, adding hospitality, expanding own-brand and modernising its technology, all at once, all through a downturn. Most local businesses cannot match the budget, but the pattern is instructive: the stores that have been refurbished are outperforming the rest of the estate, and customer satisfaction scores are being treated as a leading indicator of sales. Investment in the physical shop is being rewarded, even in a half when the group loss doubled.
The final takeaway is the timeline. Next reports its own half-year results on 17 September, which will show whether a different model, one with a large online business and a very different customer base, has escaped the same big-ticket weakness. After that, the next hard data point from the Partnership is Christmas trading in January. Until then, the £89 million figure stands as the sector’s clearest evidence yet that 2026 is a year in which British retailers are paying more to stand still.
Frequently asked questions
How much did John Lewis Partnership lose in the first half of 2026?
The Partnership reported a loss before tax and exceptional items of £89 million for the 26 weeks to 1 August 2026, up from £34 million a year earlier. Including £35 million of exceptional charges, the statutory loss before tax was £124 million, compared with £88 million in the prior-year period.
Did Waitrose make a profit?
Yes. Waitrose sales rose 4% to £4.3 billion and it reported adjusted operating profit of £103 million, down £7 million on the prior year, giving an operating margin of 2.6%. The Partnership attributed the small decline to investment in loyalty pricing and price reductions.
Why did John Lewis department store sales fall?
Sales at John Lewis fell 2% to £2.0 billion because customers held back on big-ticket discretionary purchases such as furniture and large electricals. Full-price sales actually rose 5.5%, but the group ran more promotional and clearance activity to keep stock disciplined, which widened the adjusted operating loss to £83 million from £53 million.
Will John Lewis Partners get a bonus this year?
No decision has been made. The Partnership Bonus is decided at the full-year results in March, based on the whole year’s profit. A 2% bonus was paid for the year to January 2026. Because the majority of profit is earned between August and January, the outcome depends largely on Christmas trading.
How much is the Partnership investing?
Investment reached £246 million in the first half, up 29% year-on-year, and the Partnership expects to invest around £600 million over the full year across store refurbishments, supply chain including a new Avonmouth distribution centre, technology modernisation and own-brand product development.
Is John Lewis Partnership in financial trouble?
The Partnership says liquidity stands at £1.4 billion and external borrowings are at historic lows, so the doubled loss is being funded from its own resources while it invests. The first half is habitually loss-making because most profit comes from the Christmas period. The risk is a weak second half, which the Partnership itself says it views cautiously.
Who is the new managing director of John Lewis?
Will Kernan has been appointed managing director of John Lewis, succeeding Peter Ruis, according to the interim results announcement. Jason Tarry remains chairman of the John Lewis Partnership.
How many John Lewis and Waitrose shops are there?
At the last full-year results the Partnership operated 34 John Lewis shops and 315 Waitrose shops, the latter including 47 convenience branches and 29 Welcome Break motorway service locations. Waitrose has since acquired three further sites, with openings planned at Hale Barns and Cricklewood.
When does Waitrose and John Lewis next report?
The Partnership typically publishes a Christmas trading update in January, followed by full-year results in March. The full interim results announcement is available on the John Lewis Partnership media centre.