John Lewis revamp cuts profits in half

ProFITS at John Lewis have slumped after it was hit by one-off costs, including investment in its website, improvements to stores and redundancies.

The group, which includes Waitrose, made £26.6m in the six months to the end of July, down 53.3pc on the same period last year.

Chairman Sir Charlie Mayfield said the group suffered in categories linked to the housing market, which has seen a marked slowdown since the eU referendum.

He said the company also suffered reduced profit margins on sales caused by the fall in the value of the pound, making imports more expensive.

‘The first half of this year has seen inflationary pressures driven by exchange rates and political uncertainty,’ he said.

‘These have dampened customer demand, especially in categories connected to the housing market. The exchange rate-driven increase in cost prices has also put pressure on margin.’

Stripping out the effect of exceptional items, profit before tax was down by 4.6pc to £83m, while operating profit fell by 39pc to £69m. Gross sales across the Partnership, which is owned by its staff, rose 2.3pc to £5.4bn.

John Lewis is hoping to revamp its stores by offering concierges at the entrances to shops and attracting customers to stay longer by offering more experiences such as nail bars and restaurants.

The new boss, Paula nickolds, believes the department store needs reinventing if it is to win a war against online retailers.

Looking ahead, Mayfield said the company is ‘wellset’ for the crucial Christmas trading period. However, he admitted the company expects headwinds that have hit sales growth to continue into next year.