The John Lewis Partnership has reported a loss of £55 million for the first half of the year, with the Covid-19 hit to trading leaving it in the same position as it was after World War Two – unable to pay staff a bonus.
The owner of the UK’s leading eponymous department store and the upmarket Waitrose supermarket said the closure of stores during the national lockdown and the purchase of low-profit products like toilet paper had hit overall trading.
Operating profit at the department store fell by 46 per cent during the six months to July 25. As a result, the employee-owned group will not pay its staff, known as partners, a bonus.
“The group found itself in a similar position in 1948 when the bonus was halted following the Second World War,” it said. “We came through then to be even stronger than before and we will do so again.”
The company said its worst-case scenario for the full year, as set out in April, remains a sales fall of 5% in Waitrose and 35% in John Lewis. However, it now believes the most likely outcome will be a small loss or a small profit for the year.
The UK accounting regulator has fined Deloitte a record £15m for its audit of software firm Autonomy that contained “serious and serial failures”.
Deloitte, one of the world’s Big Four auditors, and two of its now former partners, Richard Knights and Nigel Mercer, were investigated in relation to their audit of Autonomy’s financial statements for 2009 and 2010.
Autonomy, founded by Mike Lynch, was bought for $11 billion (£8.5bn) by Hewlett Packard in 2011, but the deal turned sour a year later when HP wrote off three-quarters of the former FTSE 100 company’s value, alleging it had been deceived by its finances.
The Financial Reporting Council said Deloitte has also been severely reprimanded, and has agreed to provide a “root cause” analysis of the reasons for the misconduct.
Deloitte said it regretted that the FRC tribunal had ruled that aspects of its audit work on Autonomy fell below the professional standards required.
“Our audit practices and processes have evolved significantly since this work was performed over a decade ago, and we continue to transform our audit by investing in firm-wide controls, technology and processes,” the firm said.
Fashion chain Next has raised its profit outlook for the second time in two months on the back of strong trading in recent weeks, which it attributed to cool weather and fewer people taking overseas holidays.
The group – which trades from about 500 stores in the UK and Ireland, 184 overseas, and through its Directory online business – said full-price sales in the last seven weeks were up 4% year-on-year. Its central guidance now assumes a full year pre-tax profit of £300m, up from its view in July of £195m but sharply down from the £729m made in 2019-20.
The group said its guidance takes into account the economic discomfort of the UK government’s furlough job support scheme coming to an end in October, the onset of colder weather worsening the effects of the pandemic, and recently-enhanced social distancing rules depressing demand for gifts and clothing associated with traditional Christmas family gatherings.
“Even in the event of another (national) lockdown it looks like the company will still make a significant profit and still reduce its year-end debt,” chief executive Simon Wolfson said, adding that the company is on the lookout for small acquisition opportunities thrown up by the crisis.