The John Lewis Partnership has blamed heavy discounting by rivals and the cost of new stores for a near 99 per cent plunge in its first half profits.
The department store chain and owner of the Waitrose supermarket brand revealed that pre-tax profits before one-off items fell to £1.2 million in the six months to July 28th this year, a massive plunge from £83 million in the same period a year earlier.
It said that the main reason for the fall in profits was its chain of John Lewis department stores, which were forced to cut prices to match discounting among rivals.
The department store division slumped to a £19.3 million first half loss compared with a £54.4 million profit a year before as its “never knowingly undersold” price matching policy was stretched by what has been reported as the highest level of discounting by competitors in almost ten years.
Waitrose profits were also down, falling 12.2 per cent to £96.4 million in the first half, despite a rise in sales to £3.4bn.
Sir Charlie Mayfield, chairman of the John Lewis Partnership, said: “These are challenging times in retail. Profits before exceptionals are always lower and more volatile in the first half than the second half. It is especially so this half-year, driven mainly by John Lewis & Partners where gross margin has been squeezed in what has been the most promotional market we’ve seen in almost a decade.”
The company has added that the “level of uncertainty facing consumers and the economy, in part due to onging Brexit negotiations, made it difficult to forecast trading for the next six months, but it expects profits o be down.