Published on September 13th, 2018 | by The GC Team0
Price-matching drives down profits at John Lewis
The John Lewis Partnership today reported profits down by almost 99% for the first-half of the year and said it expects full-year profits to be substantially lower than last year for the Partnership as a whole.
Chairman of the firm Sir Charlie Mayfield said: “These are challenging times in retail.”
The Partnership – John Lewis and Waitrose – saw profits fall to £1.2 million for the six months ended 28th July 2018.
The fall was driven mainly by John Lewis & Partners, where the commitment to maintain price competitiveness was the dominant factor.
“This reflects our decision not to pass on to our customers all cost price inflation from a weaker exchange rate and from our Never Knowingly Undersold promise, where we have seen an unprecedented level of price-matching as other retailers have discounted heavily,” said Mayfield.
Gross margin was squeezed in what the retailer described as “the most promotional market we’ve seen in almost a decade.”
Commenting on the outlook for 2018/19, Mayfield said: “With the level of uncertainty facing consumers and the economy, in part due to ongoing Brexit negotiations, forecasting is particularly difficult, but we continue to expect full-year profits to be substantially lower than last year for the Partnership as a whole.
“We expect profit growth in Waitrose & Partners will be offset by the continuing margin pressure in John Lewis & Partners and by incremental costs of investment.”