John Lewis on Thursday reported a fall in first half profit and warned that its performance during the rest of this year and into next would be marred by softening consumer demand.
The company, which owns Waitrose as well as its chain of eponymous department stores, posted a 2.2 per cent increase in revenue for the six months to the end of July compared to the same period last year, but suffered a 12.8 per cent fall in operating profit before exceptional items.
“As we anticipated in our full year results statement in March, the first half of this year has seen inflationary pressures driven by exchange rates and political uncertainty. These have dampened customer demand, especially in categories connected to the housing market,” said Charlie Mayfield, chairman of the John Lewis Partnership.
He said that the company was “well set for our all-important seasonal peak” but added that the group expect the “headwinds that have dampened consumer demand and put pressure on margins to continue into next year”.
He also said that he expects the company will incur higher pension accounting charges in the second half year, as a result of low interest rates.
“These will all impact our full year profits.”
Last year’s Brexit vote sent the pound tumbling against other major currencies and inflation has jumped squeezing disposable incomes.
Earlier this week, official data showed that inflation had jumped to 2.9 per cent in August, beating analyst expectations and the Bank of England’s target. Separate data showed that average annual total wage growth in the three months to July was just 2.1 per cent.
The company operates 48 John Lewis shops across the UK as well as 353 Waitrose shops.
It is the UK’s largest example of an employee-owned business where all 84,000 staff are partners in the business.