John Lewis to repay £300m Covid loan two months early
John Lewis is to repay a £300m government Covid support loan almost two months early, as the retailer upgraded its profit guidance after stronger than expected sales during the crucial festive season.
The upgrade means the John Lewis Partnership, which also owns Waitrose, appears to have avoided reporting potentially its first full-year loss since the employee-owned business was set up in 1920.
“Despite the headwinds of the last year when John Lewis stores were closed for several months, and future trading volatility, the partnership believes it has sufficient liquidity [to repay the loan early],” the company said.
The loan had been due to be repaid to HMRC and the Bank of England by 15 March.
The company used the early repayment announcement to, in effect, issue a Christmas trading update, saying that sales in the period, known as the golden quarter because of its impact on retailers’ annual sales, had proved more resilient than had been feared.
“Trading during the peak, which includes Black Friday and the Christmas period, held up better than anticipated,” the company said. “As a result, we expect our full-year profits to be ahead of profit guidance provided at our half-year results last September, where we said the most likely outcome would be for a small loss or a small profit for 2020-21.”
Despite the early loan repayment, John Lewis has stood firm on its refusal to repay business rates relief, despite a flurry of supermarkets deciding to return £1.8bn in emergency taxpayer support in December after experiencing strong food sales during the pandemic.
The owner of Waitrose, which has also had strong food sales, has held on to the money, saying it helped counteract the devastating impact of the coronavirus crisis on its clothing operations.
In November, the company announced it would axe 1,500 head office jobs as part of a £300m cost-cutting drive.
In September, John Lewis scrapped its annual staff bonus for the first time in 67 years after warning it could be in line to record its first ever annual loss. Last summer, the company said it would not reopen eight John Lewis stores after reassessing its portfolio during the first national lockdown.
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