The John Lewis Partnership has revealed half-year profits crashed 98.8pc as it battled against “challenging times” and the most promotional market for nearly a decade.
The owner of the department store chain and supermarket Waitrose posted underlying pre-tax profits of £1.2m for the six months to July 28.
It said profits at John Lewis & Partners have continued to be squeezed by strong competition as it moves to keep prices low despite inflation and has offered “unprecedented” levels of price matching through its Never Knowingly Undersold pledge.
The group reiterated warnings that it continues to expect profits in the full 2018-19 financial year to be “substantially lower”.
Sir Charlie Mayfield, chairman of the John Lewis Partnership, said: “These are challenging times in retail.”
He added the group was seeing the “most promotional market we’ve seen in almost a decade”, with other retailers discounting heavily.
“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,” he warned.
The firm – which recently rolled out the & Partners rebrand across the group – had alerted over profits at a strategy update in June, when it also said it would shut another four Waitrose convenience shops and a small supermarket, affecting around 200 staff.
The half-year results showed on a statutory basis, pre-tax profits slumped 80.5pc to £6m.
John Lewis department stores slumped to an underling operating loss of £19.2m from earnings of £54.4m a year earlier.
Like-for-like sales at the chain fell 1.2pc.
This offset a better performance at Waitrose, which remained in profit albeit down 12.2pc at £96.4m on an underlying basis.
Like-for-like sales rose 2.6pc at the supermarket, thanks to a marked improvement in the second quarter, with the grocery chain on track for a full-year trading profit.
Sir Charlie said the group expects profit growth in Waitrose to continue to be offset by the squeeze at John Lewis.
But he pledged to continue with plans to invest in the group – at a rate of £400m to £500m a year – despite the pressures on its profits to drive long-term growth.
“This will take a lot of hard work from all of our partners, but we are confident in our commitment, drive and ability to deliver the partnership’s strategy,” he said.