The John Lewis Partnership has bemoaned falling consumer demand and cost increases linked to the Brexit-hit pound as it reported a collapse in half-year profits.
The group, which is behind the eponymous department store chain and posh supermarket Waitrose, saw pre-tax profits for the six months to the end of July plummet 53.3% to £26.6 million.
The figure includes exceptional items linked to restructuring, property and redundancy costs.
Chairman Sir Charlie Mayfield said the group suffered in categories linked to the housing market, which has exhibited a marked slowdown since the EU referendum.
Chairman of the John Lewis Partnership Sir Charlie Mayfield (PA)
“The first half of this year has seen inflationary pressures driven by exchange rates and political uncertainty,” he said.
“These have dampened customer demand, especially in categories connected to the housing market. The exchange rate-driven increase in cost prices has also put pressure on margin.”
Retailers have been among the hardest hit by the decline of the UK currency, which has resulted in costs and shop prices soaring, denting consumer demand.
However, Sir Charlie added that the group has held back on increasing prices across “many areas”.
Gross sales across the Partnership rose 2.3% to £5.4 billion, but like-for-like sales showed only muted growth. Like-for-like sales at Waitrose rose 0.7% while at John Lewis comparable sales nudged up just 0.1%.
Stripping out exceptional items, profit before tax was down 4.6% to £83 million, while operating profit sank 39% to £69 million.
Looking ahead, Sir Charlie struck a sombre tone, warning of more pain: “Sales growth has continued in the first few weeks of the second half. We are well set for our all-important seasonal peak, but we expect the headwinds that have dampened consumer demand and put pressure on margins to continue into next year.”