JOHN LEWIS PROFITS TUMBLE BY 99%:
THERE were fresh woes for the high street yesterday as John Lewis revealed that its half-year profits had fallen by an astonishing 99%, with it blaming “challenging times in retail”.
The owner of John Lewis, which has a store in Cardiff, announced that profits for the first half of the year were just £1.2m compared with £82m in the same period last year – a fall of 98.8%.
Sir Charlie Mayfield, chairman of the John Lewis Partnership, put this down to “challenging times in retail” and said the firm was making decisions that would allow it to be sustainable in the long term.
But despite its falling profits, a spokeswoman for the firm – which also owns supermarket giant Waitrose – said there were no plans to announce John Lewis store closures or further job cuts.
Last month it was announced that 270 “back office” jobs would be axed, affecting all John Lewis department stores including Cardiff. However, as part of the changes, a spokeswoman said it would be creating 70 new job roles.
John Lewis & Partners said it has continued to be squeezed by strong competition and has offered “unprecedented” levels of price-matching through its Never Knowingly Undersold pledge.
“This year there has been twice as many extravaganza days as there were a year ago and actually the discounts have been even deeper,” Sir Charlie told the BBC’s Today programme.
“We’re never knowingly undersold at John Lewis, so of course we are matching that, and that affects margins.”
Sir Charlie also blamed Brexit, saying the chain had also not been passing on to consumers all of the inflationary impact from the weakness in sterling. The pound has slumped since the vote to leave the EU, pushing up the cost of imported produce.
The company has also warned that its full-year profits would be substantially down.
The news comes after it was reported last week that the company had paid Sir Elton John £5m to feature in this year’s Christmas advert.
It has also undergone a recent rebranding that added “& Partners” to John Lewis and Waitrose, to put its 83,000 staff, known internally as partners, “at the heart” of the business.
2018 has been a difficult year for high street retailers, with department stores showing some of the most significant signs of financial distress.
Meanwhile, Sports Direct board members have discussed a possible merger between Debenhams and House of Fraser, a company director has revealed.
Outgoing senior non-executive director Simon Bentley said at the Sports Direct general meeting that a combination had “been discussed”.
He added the company still has its “hands full” with integrating House of Fraser, which Sports Direct acquired out of administration last month.
Sports Direct owns just under 30% of Debenhams, close to the threshold at which it must launch an official takeover bid.
In June, House of Fraser collapsed into administration, with the Cardiff store being included in the 31 that were under threat of closure.