Annual Report & Accounts

The past year has been one of the most challenging in the Partnership’s history. Retail is changing fast around us and the Partnership is adapting just as fast. We are laying the foundations for growth to secure the Partnership for future generations of customers and Partners.

OUR FINANCIAL PERFORMANCE

£(517)m LOSS BEFORE TAX, AFTER EXCEPTIONAL ITEMS

In a difficult year, the Partnership recorded a Loss before tax of £(517)m, compared to a Profit before tax of £146m in the previous year. This is the result of substantial exceptional costs of £(648)m, mainly the write down in the value of John Lewis shops owing to the pronounced shift to online, as well as restructuring and redundancy costs from store closures and changes to our head office.

6.7% RETURN ON INVESTED CAPITAL (ROIC)

ROIC improved from 5.8% to 6.7%, entirely driven by the reduced level of invested capital. This is primarily due to the exceptional impairment of John Lewis shops, the lower level of investment as we slowed this down to preserve cash, shop closures and the temporary favourable working capital position.

£131m PROFIT BEFORE TAX AND EXCEPTIONAL ITEMS

Our Profit before exceptionals was £131m. While this was up £61m on the previous year, the Partnership would have made a loss before exceptionals if it wasn’t for £190m of Government support, which was made up of business rates relief and furlough support (the latter claimed only to July 2020). Government support covered the direct operational costs of the pandemic and substantial hit to trading operating profit, with the temporary closure of our department stores.

£3,500 PROFIT PER AVERAGE FULL-TIME EQUIVALENT (FTE) PARTNER

Profit before Partnership Bonus, tax and exceptionals was up year-on-year, but after tax and adjusted for above market reward (namely the reduced pension benefit), it was lower. However, this reduction was offset by lower average FTE Partners. As a consequence Profit per average FTE Partner was in line with last year.

3.4X DEBT RATIO

The strength of our cash position improved our debt ratio - how much we owe as a proportion of the cash we generate each year - to 3.4 times from 3.9 times last year. We expect this to reverse in 2021/22 as we invest in our turnaround before returning to an improving trajectory the following year. In the medium term we continue to target a debt ratio of around three times.

£1.5bn cash plus bank facilities of £500m LIQUIDITY

We managed cash tightly through the year and intentionally slowed investment when the pandemic hit to preserve cash. We also obtained new medium term bank loans of £150m, and raised £136m from the sale and leaseback of 11 Waitrose shops. Consequently, our liquidity as of January 2021 was unusually high with £1.5bn cash plus bank facilities of £500m. This cash position is required  to help meet our obligations. We carry £2.1bn of total net debts, with £575m of borrowings due to be repaid in the next four years. They will also provide us with a buffer to withstand material volatility in trading. Managing cash prudently is particularly important as we cannot raise funds from issuing shares because we are employee-owned.

OUR YEAR

FURTHER INFORMATION