John Lewis reports 53 per cent slump on half-year profits as Brexit looms

The John Lewis Partnership has reported a 53 per cent fall in its half-year profits, despite boosted sales growth at its Waitrose stores and other retailers.

The company said that higher costs and “dampened customer demand” were to blame, as well as Brexit uncertainty and the weaker pound in today’s climate.

Before tax, profit came in at £26.6m for the six months to July 29, which was held back by a various costs including restructuring and pension charges.

Speaking to Sky News, Sir Charlie Mayfield said: “The main reason sterling is lower… is because of the decision to leave the European Union and that does have an impact in a number of different ways on businesses.

“There’s also the uncertainty on what Brexit will mean, which does weigh on businesses and on consumers. Those factors both have an impact on the trading environment, but that is for everybody…

“We’re not saying that this is peculiar to John Lewis Partnership or Waitrose - everybody is facing that issue.”

Despite this, gross sales were up 2.3 per cent for both brands - with revenue hitting almost £4.8bn. Operating profit and property profits were up 10 per cent in John Lewis, however trading profits for Waitrose had an 18 per cent drop.

In addition, the cost of imported goods for retailers has risen since the Brexit vote because of the weakened pound, which has left stores under pressure to potentially raise the cost of in-store items.

Mayfield added: “Our full-year profits will depend, as they always do, on the final quarter, which typically accounts for well over half of our profits before exceptional items.

“We expect margin pressure to continue into the second half year and we will incur higher pension accounting charges, as a result of low market interest rates at the start of the year. These will impact our overall profits.”