Why John Lewis is splurging 26% more on stores and tech while rivals pull back
In a year where the UK retail sector is bracing for a slowdown, with overall business investment expected to contract by 0.2% amid tax hikes and economic uncertainty, the John Lewis Partnership is bucking the trend.
The employee-owned retailer, which includes the upscale Waitrose supermarkets and John Lewis department stores, just reported a 6% rise in adjusted profits to £134 million for the 53 weeks ending 31 January 2026.
It’s now doubling down on spending – pouring 26% more into stores, technology, and supply chains than the previous year.
This bold move comes as many rivals grapple with store closures, delivery cutbacks, and a “doom loop” of declining high streets that has seen thousands of shops shutter annually.
While brands like Claire’s and Quiz have entered administration in early 2026 and ultrafast grocery delivery services are consolidating due to high costs, John Lewis is leaning into a multi-year transformation plan aimed at boosting customer loyalty and omnichannel experiences.
“Our multi-year plan to invest in customers and our brands for the long term is working; we have grown customer numbers and achieved record satisfaction,” said Chairman Jason Tarry in the results announcement.
“There is much still to do, but our growing cash generation and strong balance sheet enable us to invest more in our brands and our Partners to improve the experience for our customers.”
The strategy appears to be paying off.
Partnership sales climbed 5% to £13.4 billion, driven by a 7% increase at Waitrose to £8.5 billion and a 3% uptick at John Lewis to £4.9 billion.
Operating cash flow jumped £63 million to £595 million, bolstering liquidity to £1.6 billion – including an undrawn £460 million credit facility.
This financial firepower allowed the company to award a 2% bonus to its employee-owners (equivalent to an extra week’s pay) and commit £108 million more to base pay in 2026, on top of £340 million invested in staff over the past three years.
Increased investment
Arguably, the biggest headline grabber is the investment surge.
In 2025/26, John Lewis ramped up spending on refurbishments, tech upgrades, and brand initiatives by 26%, leading to record Net Promoter Scores and loyalty programme growth.
For Waitrose, that meant modernising 23 stores, opening three new convenience shops, launching “Little Treats” rewards, and boosting online sales by over 13%.
The grocer also hit 97% on-shelf availability after investing in merchandising systems and announced a new 360,000-square-foot distribution centre in Bristol.
At John Lewis department stores, the focus was on enhancing the in-store vibe with major makeovers in locations like Liverpool and Bluewater, plus beauty expansions in Solihull, Welwyn Garden City, and Cambridge.
The retailer extended “Ship from Store” to 28 sites, added 200 new brands including an exclusive Topshop partnership, and opened six new hospitality venues, bringing the total to 62. These efforts helped adjusted operating profit rise to £58 million, with margins improving to 1.6%.
Looking ahead
Looking ahead, John Lewis is “cautious” about 2026/27 trading amid a challenging macro environment, but Tarry emphasised the company’s positioning: low external debt, strong cash flow, and a retail-first strategy.
It’s even expanding into financial services after gaining regulatory approval as a credit and insurance broker, while exiting its Build-to-Rent property venture due to economic shifts.
John Lewis’s bet is that investing through the storm will widen its moat.
As high streets struggle and rivals retrench, this employee-owned giant is playing the long game, refurbishing flagships like Oxford Street to draw shoppers back in person.
