Overcast

Overcast

max temp: 5°C

min temp: 5°C

Search

Department store John Lewis sees profits plunge amid redundancy costs and Brexit pressures

PUBLISHED: 08:46 14 September 2017 | UPDATED: 10:04 14 September 2017

John Lewis, Norwich. Photo : Steve Adams

John Lewis, Norwich. Photo : Steve Adams

Copyright Archant Norfolk 2014

The John Lewis Partnership has bemoaned falling consumer demand and cost increases linked to the Brexit-hit pound as it reported a collapse in half-year profits.

The group, which is behind the eponymous department store chain and upmarket supermarket Waitrose, saw pre-tax profits for the six months to the end of July plummet 53.3% to £26.6m.

The figure includes exceptional items linked to restructuring, property and redundancy costs – which has seen nearly 400 jobs axed across the group.

John Lewis, which has stores in Norwich, Chelmsford and Ipswich, has outsourced food preparation for its in-store The Place to Eat restaurants, cutting staff.

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

“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.”

Retailers have been among the hardest hit by the decline of the UK currency, which has resulted in costs and shop prices soaring, denting consumer demand.

However, Sir Charlie added that the group has held back on increasing prices across “many areas”.

Gross sales across the Partnership rose 2.3% to £5.4bn, but like-for-like sales showed only muted growth. Like-for-like sales at Waitrose rose 0.7% while at John Lewis comparable sales nudged up just 0.1%.

Stripping out exceptional items, profit before tax was down 4.6% to £83m, while operating profit sank 39% to £69m.

Looking ahead, Sir Charlie struck a sombre tone, warning of more pain: “Sales growth has continued in the first few weeks of the second half. We are well set for our all-important seasonal peak, but we expect the headwinds that have dampened consumer demand and put pressure on margins to continue into next year.”

Search hundreds of local jobs at Jobs24

Disabled swimmers in Sudbury can now access their pool more easily thanks to the generosity of a local business.

Organisers of a game developers conference in Ipswich hope the event will help establish the business sector in the town.

Rail commuters are spending over two hours getting to and from work every day as travel times increase for Britain’s workers, a new study has revealed.

Individual and business-wide achievements have been recognised at an awards ceremony celebrating the best firms in Lowestoft and Waveney.

More businesses in the East of England are showing signs of growth than the national average, but wider indicators suggest “a new phase of the economic cycle” may have started.

Management Jobs

Show Job Lists

Most read

Topic pages

Newsletter Sign Up

Sign up to the following newsletters:

Sign up to receive our regular email newsletter
MyDate24 MyPhotos24