John Lewis profit evaporates after price squeeze

LONDON: Profit at Britain’s biggest department store group John Lewis Partnership was wiped out in the first half as it was forced to match discounting by its struggling rivals on a fiercely competitive high street.
The employee-owned group, which has rebranded its department stores John Lewis & Partners and its supermarkets Waitrose & Partners, reported a 99 per cent slump in first-half profit before exceptional to 1.4 million pounds, hit by its pledge to match prices and lower sales of big-ticket home items.
The group had warned in June that first half profits, which are always much lower and volatile than the second half, would be close to zero. It indicated on Thursday that the second half of the year would also be tough going.
“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 group as a whole,” it said. Profit at John Lewis’s 50 department stores and home shops was squeezed by its “Never Knowingly Undersold” promise as other retailers discounted heavily and a decision not to pass on all the cost inflation from a weaker pound, it said.
Competitor Debenhams has issued a string of profit warnings and last month House of Fraser was bought out of administration by Sports Direct.
John Lewis Partnership Chairman Charlie Mayfield said the group was “not hunkering down and going on the defensive”. — Reuters