The John Lewis Partnership has seen profits plummet, as a competitive retail market and asset write-downs in its traditionally volatile first half put pressure on its figures.
Pre-tax profits fell 14.8% to £82.4 million for the six months to July, but including a £25 million charge for the write-off of sites it no longer intends to develop, pre-tax profit plunged 74.6%. In the first half of the year, the Partnership's gross sales grew 3.1% to £5.27 billion. Waitrose gross sales grew 2.2% and John Lewis gross sales by 4.5%, with both brands growing market share and customer numbers.
However, JLP said that first half profits are “always lower and often more volatile” than in the second half which typically accounts for at least two-thirds of annual profits.
The group said that that it had also decided to prioritise “a number of key areas of investment” including IT, distribution and in pay, as well as making a shift towards existing stores in Waitrose which resulted in the exceptional property asset write-downs.
JLP added “These decisions form part of our strategy to get ahead of the significant changes that are affecting the wider retail market and we are confident they will position us well for the future.”
Sir Charlie Mayfield, chairman of John Lewis Partnership, commented:
'We have grown gross sales and market share across both Waitrose and John Lewis, but our profits are down. This reflects market conditions and, in particular, steps we are taking to adapt the Partnership for the future. These are not as a consequence of the EU referendum result, which has had little quantifiable impact on sales so far. Instead there are far reaching changes taking place in society, in retail and in the workplace that have much greater implications.
“Our ownership structure makes it especially important that we manage the Partnership carefully and thoughtfully for the long term and our plans anticipate the impact of these bigger changes. Evidence of that is already showing within these results and will become increasingly evident as we implement our long-term strategy.”
