LONDON (Alliance News) - John Lewis Partnership PLC said Thursday its profit for the first half of the financial year plunged amid "challenging times in retail", as it issued a warning for the full-year.
For the six months to July 28, the company, which owns a string of department stores and the Waitrose supermarket chain, posted pretax profit down 81% to GBP6.0 million from GBP30.8 million a year before. On an adjusted basis, pretax profit slumped 99% to GBP1.2 million.
At the end of June, the company had said it expected its interim profit to be "near zero".
Operating expenses surged to GBP1.58 billion from GBP1.47 billion a year ago. Meanwhile revenue was up 1.5% year-on-year to GBP4.86 billion from GBP4.78 billion.
Chairman Charlie Mayfield said: "These are challenging times in retail. We're continuing to improve our offer for customers while ensuring we have the financial strength to continue developing our business going forward. This is reflected in both brands continuing to grow sales and customer numbers, and our total net debts reducing."
Looking ahead, John Lewis said that it continues to expect full-year profits to "be substantially lower than last year for the group 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," the group said.
The company has seen margin pressures at its John Lewis division, as the department store committed to "maintain price competitiveness".
Like-for-like sales at John Lewis decreased by 1.2% as the unit generated revenue of GBP1.66 billion.
Fashion sales were up 1.2%, "outperforming the market" while sales of the company's own brand increased by 12% year-on-year.
Electronics sales grew by 7.8% but sales in the Home department dipped by 4.2% "impacted by a fall in demand for big ticket and bespoke items", the company reported.
The supermarket part of the business, Waitrose & Partners, saw profit down on last year, but like-for-like sales increased 2.6% making GBP3.19 billion in revenue. The company said Waitrose is on track for profit growth for the full year.
Despite the sharp reduction in profit, the company was able to lower its net debt by GBP700 million. John Lewis explained that this is "consistent with our plans to ensure a strong financial position in order to invest in our strategy of differentiation at a rate of GBP400 million to GBP500 million per year".
