Profits have taken a huge hit at the John Lewis Partnership after the group chose to cancel a store opening programme.
The partnership, which includes supermarket Waitrose and upmarket retailer John Lewis, announced that pre-tax profits for the six months to 30 July had fallen 74.6 per cent to £56.9 million. It attributed the drop primarily to an exceptional charge of £25m related to property assets no longer intended to be developed, as well as what it said was 'deep structural changes in the retail market.'
Sales at Waitrose rose 2.2 per cent to £3.25 billion, while John Lewis's were up 4.5 per cent to £2bn. Both brands grew market share and customer numbers.
Chairman Sir Charlie Mayfield pointed out that first-half profits are always lower than the second half, which include the key Christmas trading period and typically account for two-thirds of the business's annual profits.
As well as the store write-downs, Mayfield said the company has invested in IT, its distribution network and pay, as well as putting the focus on existing Waitrose stores.
He added that the three main priorities for the partnership going forward are strengthening the financial position, bolstering the appeal of the two brands, and creating 'better jobs for better performing partners, on better pay'.
For the first six weeks of the second half, gross sales across the partnership are up 3.8 per cent, with Waitrose increasing five per cent (1.4 per cent like for like, excluding petrol), and John Lewis up two per cent (0.7 per cent like for like).
Mayfield added that he expects trading pressures to continue through this year and next, and added that so far the EU referendum result has had little quantifiable effect on business.
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