John Lewis warns on profits after disappointing festive trading

John Lewis has warned it may not meet its profit targets this year, after disappointing sales at Waitrose and the rest of its store portfolio over Christmas.

The heritage British retailer alerted staff to the slower-than-expected festive trade, a symptom of the increasing despondency on the high street sparked by Chancellor Rachel Reeves' record £40 billion tax raid.

The poor performance means that the partnership is now unlikely to achieve its profit aims of £131 million for the full year.

In internal documents seen by The Telegraph, John Lewis blamed “lower consumer confidence and weaker than expected market confidence” for missing its sales target in the month to 21 December, as well as the fact that key trading days fell outside this period. It said: “Both John Lewis and Waitrose missed their sales targets.”

It added that staff should still feel "proud of our performance".

The results will be seen as a setback for the partnership’s efforts to drive a turnaround following a challenging period under former chairman Dame Sharon White. After three consecutive years of losses, the partnership returned to profit in 2023. Meanwhile, John Lewis has lost ground in its competition with Marks & Spencer to remain the leading retailer for Middle England. Data from market researcher Kantar revealed that in October last year, Waitrose’s share of the grocery market fell behind M&S’s for the first time.

The partnership is hoping for a turnaround under former Tesco boss Jason Tarry, who was employed as Chairman in September. Peter Ruis, who has two decades of retail experience, was hired to run the business' department stores.

In September, John Lewis reported that stronger demand was set to drive a significant increase in profits for the year to January. Last year, it posted a pre-tax profit of £56 million, a sharp recovery from the £234 million loss recorded the previous year.

At the time, these remarks were seen as evidence that the partnership was regaining momentum after facing criticism for moving too quickly to diversify away from the high street.

Leaders have abandoned previous targets to prioritise rental homes and financial services, insisting they are now “relentlessly focused” on retail once again.

As part of its turnaround strategy, the partnership is working to modernise its department stores and increase staff presence on the shop floor. It is also preparing to open new supermarkets for the first time in six years.

Waitrose announced plans to open 100 new stores by 2029 while refurbishing and upgrading nearly half of its current locations, covering approximately 150 sites.

A John Lewis spokesman told The Telegraph: “As we said in September we remain on track to deliver full year pre-exceptional profits significantly above the £42m we reported in 2023-2024 and we will update on our performance at our results in March."

John Lewis has not responded to request for comment.