Profit wash-out as John Lewis shuts five Waitrose sites

● Experts say retail sector undergoing an evolution as shopping habits change

sun failed to shine on Britain’s high street yesterday as John Lewis warned of a profit wipe-out and unveiled plans to put the shutters up on five Waitrose stores.

The retail partnership warned that it does not expect to make a half-year profit, while earnings for the full year will come in “substantially” lower than last year.

Its supermarket division Waitrose is to close four convenience shops and one small supermarket, all south of the Border, affecting some 200 staff.

John Lewis, which was hosting a strategy day, said: “It is widely acknowledged that the retail sector is going through a period of generational change and every retailer’s response will be different. For the Partnership, the focus is on greater differentiation, not scale.

“We have clear plans to build on our strengths and to sharpen our points of difference in both Waitrose and John Lewis.”

Sir Charlie Mayfield, chairman of the John Lewis Partnership, warned that the retail sector malaise “isn’t a blip”, saying: “It is very important that we feel the jeopardy of what is happening right now.

“This isn’t a blip, it is a major shift and it has a while to run.”

Retailers have been hit by rising costs and weak consumer confidence, with several high-profile casualties this year resulting in hundreds of store closures.

Richard Lim, chief executive at Retail Economics, said: “Even the mighty John Lewis has not been able to escape intensifying pressures building on UK high streets. The impact of rising sourcing costs, higher operating costs and the turbulent consumer environment has flatlined profits.

“There’s a growing sense of panic for the retail sector as the intergenerational shift in behavioural trends is fragmenting the market.”

Calum Bruce, investment manager of the Ediston Propthe erty Investment Company, said: “The retail industry is going through an unprecedented transformation. With increasing operating costs on the high street, as well as more demand for digital shopping, many household names have struggled to stay afloat in the current stormy market.

“While many might be worrying that current news reports mean the end for physical stores and the shopping experience, we believe this is a simple evolution of the retail sector as shopping habits change.

“In our opinion, the penetration of online sales will eventually plateau and the successful retailers will be those who are able get their online and physical strategies working in tandem, making the most of both bricks and clicks.”

Patrick Lewis, group finance director at John Lewis Partnership, said the company hoped to start increasing its profits again from 2019 onwards.

For the financial year-todate, Waitrose’s like-for-like sales have grown 1.5 per cent, while John Lewis’ like-for-like sales have been flat.