14th Sep 2018
The John Lewis Partnership announced yesterday that profits had fallen by an extraordinary 99% in the first half of 2018.
The company’s financial results for the six-month period up until 28 July showed that profits fell to just £1.2 million, despite £5.5 billion worth of goods being sold.
Full year profits are also expected to be substantially lower than in 2017.
The retailer said: “With the level of uncertainty facing consumers and the economy, in part due to ongoing Brexit negotiations, forecasting is particularly difficult, but we continue to expect full year profits to be substantially lower than last year for the partnership as a whole.”
The figures come in light of the department store matching discounting “extravaganza days” by rivals.
John Lewis Partnership chairman Sir Charlie Mayfield said: “This year there have been twice as many extravaganza days as there were a year ago, and actually the discounts have been even deeper.
"We're never knowingly undersold at John Lewis, so of course we are matching that, and that affects margins."
Sir Charlie also said that the chain had not been passing on to customers all of the inflationary impact from the weakness in sterling – caused by the Brexit vote to leave the EU – which in turn has pushed up the cost of imported produce.
Julie Palmer, partner at professional services consultancy Begbies Traynor, commented: “This brand was hailed as the model which all should follow, and as a commercial and customer success – make no mistake, for the high street this is as significant as the fall of the Roman empire.
“And, much like the fall of Rome, it's not just the empire that suffers, the infrastructure that supplies it will too. The UK [retail] industry must steel itself for dark times to rise again.”