John Lewis Partnership has reported a 99 per cent drop in its first-half profit amid rising costs and discounting by rivals.
The British brand made a pre-tax profit of just £6m for the half year that ended on 28 July, which was 80.5 per cent lower than the same period last year.
“This has been the most promotional market we have seen at least in ten years,” said Sir Charlie Mayfield, chairman of John Lewis told media following the trading update.
“The biggest single reason for the decline in profits is all about margin. This year there has been twice as many extravaganza days as there were a year ago and actually the discounts have been even deeper and we’re never knowingly undersold at John Lewis, so of course we are matching that, and that affects margins.”
The company has also been investing in data protection and cyber security.
Martin Lane, Managing Editor of money.co.uk, further adds: “Even the high street elite aren’t immune to the nightmare that has been hitting the retail sector. The John Lewis rebrand and expensive TV ad to promote it might at first seem decadent considering this huge drop in profits, but it could be what the retailer needs to stay in the heart and the minds of the great British public.
The number of high street retailers who have axed jobs, gone into administration or had to shut stores this year is staggering. Consumer habits have drastically changed due to online shopping becoming so convenient. It’s become evident over the years that shoppers are tightening their purse strings where they can and turning to online platforms to find cheaper alternatives. High street retailers simply cannot compete.
Waitrose has been overtaken by both Lidl and Aldi in their grocery market share leaving the luxury supermarket out in the cold. John Lewis on the other hand is having to battle the online retail marketplace where discounts are not just sought after but expected. The partnership has its work cut out to recover from this.”