John Lewis profits down 99%

The media has been abuzz with John Lewis Partnership’s announcement that its profits fell by 99% for the first half of 2018 to £1.2 million. The company put this down to its ‘price match promise’ and the fact that rival firms had been involved in a discounting extravaganza.

The omnichannel retailer’s portfolio includes the Waitrose grocery chain.

Looking to the full year trading statement, John Lewis warned that profits would be substantially lower than originally forecast.

At the moment there is also a rebranding program, with the firm being renamed John Lewis & Partners as well as Waitrose & Partners in an attempt to highlight the fact that it’s 85,000 members of staff are co-owners of the business they work with.

In its trading statement, John Lewis stated, ”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.”

Across the whole business the first half of the year saw the department store business being hit hardest. Sir Charlie Mayfield, the John Lewis Chairman said that the profit squeeze was “what has been the most promotional market we’ve seen in almost a decade”.

Across the e-commerce sector this is quite a shock. John Lewis has a strong e-commerce presence and seems to be making a success of its ‘clicks and bricks’ model where it runs bricks and mortar stores and an online presence simultaneously. It seems that the woes of the High Street have hit the omnichannel retailer very hard. It is not inconceivable that’s a major change program away from the High Street they take place in order to focus on its successful e-commerce business.