The John Lewis partnership saw pre-tax profits fall nearly 15 percent on Thursday, after being hit by strong competition and higher pay.
The group’s half yearly figures showed a 31.2 percent drop in operating profit at John Lewis department stores, with a 28.9 percent drop at Waitrose supermarkets. Operating profit for the group dropped 58.3 percent to £113.7 million.
However, chairman Sir Charlie Mayfield was quick to reiterate the profit drop was not a result of the EU referendum.
“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.”
Like-for-like sales rose John Lewis rose 3.1 percent, but fell 1 percent at Waitrose supermarkets.
“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”, Mayfield said in a statement.
John Lewis said volatile trading was common in the first half of the year than the second half, which accounts for two thirds of the annual profits.
The trading statement set out its three key focus steps going forward, including increasing the resilience of the group’s balance sheet to market shocks and investing in new growth in the future.
The group also set out plans to keep worker pay competitive – in March, wages at John Lewis increased by 5.1 percent on average for their lowest paid staff.
The partnership will also be launching a premium food range in Waitrose and a new own-brand luxury womenswear label, Modern Rarity, in John Lewis.