Sir Charlie Mayfield, chairman of the John Lewis Partnership, has reiterated the retailer’s commitment to its “Never Knowingly Undersold” price promise, despite “unprecedented” levels of promotion on the UK high street.
Profit before tax and exceptional items at the John Lewis Partnership, which includes supermarket Waitrose, fell 98.8% to £1.2m for the six months to 28 July. Gross sales across the business rose to 1.6% to £5.5bn for the period. However, department store division John Lewis & Partners made an operating loss of £33.5m, compared with a £33.3m profit last year.
The department store pointed to its price promise, as well as the drop in the value of sterling, new stores and higher IT costs as causes of the slump in profits.
Speaking today following the results, a confident Mayfield said: “We have been never knowingly undersold for nearly 90 years and it is the most comprehensive price promise in the market – no one else has anything quite like it.
“The trust customers have in us because of that promise is extremely valuable and has proven to be so over many years. In times like this, the integrity of that promise is tested, but we can’t be never knowingly undersold in the good times, we have to be able to offer it in the tough times.
“Last year was pretty promotional, but in the first half of this year we’ve seen twice as many [discounting] extravaganza days as there were in the same period last year and the discounts were deeper. These are unprecedented conditions.”
Mayfield said that although fashion was one of the areas particularly hit by discounting from high street rivals, womenswear remains a key focus. The retailer unveiled its new own-brand label, John Lewis & Partners, earlier this month.
The 800-piece womenswear collection has been described as John Lewis’s “most significant fashion investment to date”, and features clean, simple styles in bright colours alongside tonal neutrals.
“Looking at our strategy, what we’ve said is that we are going to more different, less comparable than we are today. Half of our offer will be own brand or exclusive to us.
“Womenswear has been growing at nearly 5% year on year and that was even before the recent relaunch of John Lewis womenswear,” Mayfield said.
“In the very early results in the week since the launch, we’ve seen double-digit growth. We must not forget that people have not fallen out of love with shopping. They still want amazing product and incredible service.”
He also stressed that there is still a place for department stores on the high street, despite the current challenges facing House of Fraser and Debenhams: “The talk about whether or not department stores can survive always puzzles me.
“Being a department store does not give us the eternal right to existence, but those department stores that innovate, that change their proposition, move with the times and give customers want they want will thrive and we are determined to be in that position.”