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A transformation at John Lewis Partnership is “on track” as the retailer reported “a marked improvement” in its first-half results, with strong profit growth at Waitrose.
Partnership sales topped £5.9bn in the 26 weeks to 27 July, an increase of 2% year on year, while total revenue rose 2% to £5.2bn.
The group also reduced pre-tax losses before exceptional items by 91% to £5m, with pre-tax losses almost halving to £30m despite one-off costs of £25m related to the ongoing simplification of the business.
CEO Nish Kankiwala said: “These results confirm that our transformation plan is working and we expect profits to grow significantly for the full year, a marked improvement from where we were two years ago.
“We continue to invest heavily in quality, service and value, and customers are responding well - with more people shopping with us and customer satisfaction increasing. While we have much more to do, we’re well set up for a positive peak trading period and on target to significantly improve our performance for the full year.”
Waitrose increased sales in the half by 5% to £3.9bn thanks to 2% volume growth and 2% pricing. It helped the group’s supermarket record “strong” profit growth in the period as adjusted operating profit increased by £75m to £113m.
John Lewis sales fell 3% to £2bn in “a challenging market”, with adjusted operating losses widening to £49m.
The group added it had been “a half of strong progress” in its transformation and forecast pre-exceptional profits would be significantly above the £42m reported last year.
Morning update
Fever-Tree Drinks has cut its guidance for the year after a damp summer in the UK contributed to a fall in first-half revenues at the posh mixer brand.
Sales declined 6% in the UK to £50.9m and by 12% in Europe to £44.5m. It offset 7% growth in the US, where sales rose to £60.3m as the business extended its leadership position in tonic and ginger beer.
In the UK, Fever-Tree struggled with challenges in the wider on-trade channel, a soft gin category and poor weather. Off-trade sales were flat year on year.
The group said it had made “a strong start” to the second half with brand growth of 13% in July and August.
However, the group cut revenue growth forecasts from 10% to a range of 4% to 5% for the year.
CEO Tim Warrillow said the Fever-Tree brand performed well against a tough market backdrop.
“Whilst the first half was challenging, we are controlling the controllables,” he added.
“We’re optimistic of an acceleration of growth across the second half of the year and have seen a much more positive trading performance in July and August.”
First-half EBITDA increased 79% to £18.2m, with pre-tax profits of £13.2m.
The group also recommended an interim dividend of 5.9p per share, an 2% year-on-year increase.
The FTSE 100 made a strong start to the day, climbing 1.1% to 8,286.64pts.
Shares in Fever-Tree crashed by 7.7% to 796p as investors reacted to the downgrade in sales expectations for the year.
WH Smith is down 0.2% this morning to 1,357p after soaring more than 10% yesterday thanks to the launch of a £50m share buyback programme and a strong summer for its travel division.
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