John Lewis Partnership has posted a slide in half-year pre-tax profits to £81.9m, citing “deep structural changes in the retail market”.
The group, which also owns Waitrose, said its commitment to competitive pricing, increasing pay and investment held back profits in the six months to 30th July.
Sales across the group were up 3.1% to £5.3bn. Sales at the upmarket grocer increased by 2.2% to £3.2bn, but like-for-like sales fell 1%.
After exceptional items, including a £25m write-down on property assets that it no longer intends to develop, pre-tax profits in the period plunged 75% to £56.9m. The write-down is linked to Waitrose where, following a strategic review, the group will be “re-prioritising future investment spend towards existing stores”.
Chairman Sir Charlie Mayfield, commented: “We have grown gross sales and market share across both Waitrose and John Lewis, but our profits are down. This reflects market conditions and, in particular, steps we are taking to adapt the partnership for the future. These are not as a consequence of the EU referendum result, which has had little quantifiable impact on sales so far. Instead there are far-reaching changes taking place in society, in retail and in the workplace, that have much greater implications.”
Sir Charlie added that the uncertainty of leaving the EU will remain, with the full impact yet to become clear, and said trading pressures are expected to continue through this year and next.