John Lewis Partnership’s pre-tax profit before exceptional items fell 14.7% to £81.9m during the half year to 30 July as it invested in keeping its pricing and staff pay rates competitive, as well as improving its distribution facilities.
The parent of John Lewis and Waitrose emphasised that the fall was not a result of the UK’s vote in June to leave the European Union, which it said has had “little quantifiable impact” on sales so far.
It said it has been investing in future-proofing the business in the face of “deep structural changes in the retail market”. It warned these pressures are expected to continue throughout this year and into 2017.
There was an exceptional charge of £25m for the write-down of property assets no longer intended to be developed, and related costs. Profit before tax after exceptional items was therefore down 74.6% to £56.9m
Gross sales across the partnership rose 3.1% to £5.3bn.
At John Lewis, gross sales were up 4.5% year on year to £2bn. Like-for-like sales increased by 3.1%.
Operating profit at the department store chain fell 31.2% to £32.4m. A breakdown of profit before tax was not given.
Sir Charlie Mayfield, chairman of John Lewis Partnership, said: “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.”
John Lewis showed off two new distribution centres at its 2.4m sq ft Magna Park campus earlier this month – the results of a £150m investment and a decade of planning. Find out more about the new centres here