Sales and profits at the retail giant John Lewis have plummeted as the group have this morning revealed a 45.4 per cent fall in annual profits to £160 million.
The group which includes upmarket supermarket Waitrose, saw overall revenue climb 1 per cent to £10.3 billion for the period ending January 26, operating profits were down sharply due to challenges at John Lewis.
Operating profit at the department store fell by 56 per cent to £114.7 million due to weaker home sales, tighter margins, higher IT costs and the cost of new shops.
Like-for-like sales at the brand were down 1.4 per cent.
In contrast, operating profit at Waitrose recovered, climbing 18 per cent to £203.2 million. The supermarket’s like-for-like sales jumped 1.3 per cent.
The company said the overall retail market continued to be “challenging”.
“That’s evident in our results, especially in John Lewis & Partners, where we saw near constant discounting across many categories from October onwards in response to the combination of subdued demand, excess retail space and some other retailers’ distress,” it said.
The news is not good for staff at the chain as the Company announced they would receive a 3% bonus, the lowest since 1954,
Martin Lane, Managing Editor of money.co.uk comments:
“Even the high street elite aren’t immune to the nightmare hitting the retail sector. A 45% drop in profits is hugely worrying. It’s good John Lewis are still price matching their competitor helping consumers to get the best deal, but I do wonder how long they’ll be able to soak them up for.
“The pound in our pocket constantly feels like it’s being stretched, making the slowly shrinking bonus even more of a blow for the employees of John Lewis. Being a part owner of the business is great when things are going well – however through the harder times things get tough for everyone, not just those on the board.
“Waitrose has been overtaken by both Lidl and Aldi in their grocery market share leaving the luxury supermarket out in the cold. John Lewis on the other hand is having to battle the online retail marketplace where discounts are not just sought after but expected. The partnership really has its work cut out to recover from this.”
