The John Lewis Partnership (LON: JLH) has announced a 99 percent fall in profits.
The group reported that profits for the six months to 28 July have fallen to £1.2 million. This is compared to the £95 million in profits for the same period last year.
“These are challenging times in retail,” said Sir Charlie Mayfield, chairman of the group, who added that the department stores are being squeezed by the “most promotional market we have seen for almost a decade.”
The John Lewis Partnership warned that profits for the first half of the year would be almost wiped.
“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 retailer said.
Mayfield said: “We’re continuing to improve our offer for customers while ensuring we have the financial strength to continue developing our business going forward.”
“This is reflected in both brands continuing to grow sales and customer numbers, and our total net debts reducing.”
“The pressure on gross margin has predominantly been from our commitment to maintain price competitiveness.”
“This reflects our decision not to pass on to our customers all cost price inflation from a weaker exchange rate and from our Never Knowingly Undersold promise, where we have seen an unprecedented level of price matching as other retailers have discounted heavily,” he added.
Due to a fall in profits over the past year, staff bonuses have been cut for the fifth year in a row.
“This was why we chose to reduce the proportion of profits paid as partnership bonus last year so as to absorb these impacts while continuing to invest in the future and in strengthening our balance sheet,” said Mayfield.