The difference of a year: £66m change for John Lewis
John Lewis has seen a first half operating profit of £33.3m become a loss of £33.5m amid ‘unprecedented’ discounting and a drop in home sales.
The chain saw sales rise by 0.8% to £2.09bn in the six months to 28 July, however like for like sales were 1.2% lower.
‘Gross margin has been squeezed in what has been the most promotional market we’ve seen in almost a decade. 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. Gross margin was also affected by a sales mix shift towards electronics rather than big-ticket items in home,’ said Sir Charlie Mayfield, John Lewis partnership chairman.
He warned that the situation was unlikely to improve in the short-term. ‘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. We expect profit growth in Waitrose will be offset by the continuing margin pressure in John Lewis and by incremental costs of investment.’