John Lewis warned yesterday that full-year profits could be as much as 21 per cent lower on the back of pension charges and tough competition on the high street and in the grocery market.
The partnership, which includes John Lewis department stores and Waitrose supermarkets, said pre-tax profits in the six months to 1 August fell 26 per cent to £96.7m.
John Lewis’ pension costs are expected to surge to around £60m for the year as a whole. As a result, it expects to report profits before partnership bonus, tax and exceptions of £270m-£320m, down from £341.6m in 2014.
At John Lewis stores, operating profits were down 16 per cent to £47.1m. Managing director Andy Street said the drop was exacerbated by the uncertainty in the run-up to the election and by tough comparisons on last year, when it benefitted from World Cup fever and strong sales surrounding its 150th anniversary.
However, like-for-like sales were up three per cent and the retailer said seven per cent more customers were visiting its stores than in 2014.
Waitrose managing director Mark Price blamed the supermarket price war for a 1.3 per cent decline in underlying sales.
However, he said trading in recent weeks has improved and pointed to growing market share.
“We are on a slowly improving trajectory, both in terms of average item price and in terms of customer spend and confidence,” he said.