John Lewis and Waitrose owner suffers 77% profit plunge

Profit before tax for the year to 27 January tumbled and the group said that trading is likely to continue to be volatile

Scores of retailers across the UK have endured a tough ride in recent months, with many cutting jobs and being forced to shut outlets to bolster balance sheets (Shutterstock)

The owner of Waitrose and John Lewis department stores has reported a dramatic plunge in pre-tax profit for 2017, underscoring the extent to which the British high street has fallen victim to rising inflation, a hike in business rates and the emergence of internet shopping.

John Lewis Partnership on Thursday reported that profit before tax for the year to 27 January had hit £103.9m, which represented a 77 per cent fall on the figure for the equivalent period a year earlier. Revenues climbed by 1.8 per cent to £10.2bn.

“As we anticipated, 2017 was a challenging year,” said Sir Charlie Mayfield, chairman of John Lewis Partnership. He said that the difficult trading environment had affected many employees and that staff, known as partners, would receive a bonus of 5 per cent for the year, which was down from 6 per cent a year earlier.

For the year ahead, he said that trading is likely to continue to be volatile with lasting economic uncertainty and no let-up in competitive intensity.

“We therefore anticipate further pressure on profits.”

Scores of retailers across the UK have endured a tough ride in recent months, with many cutting jobs and being forced to shut outlets to bolster balance sheets.

Earlier this month both Toys R Us and Maplin collapsed into administration, putting close to 5,000 jobs at risk. Several restaurant chains have also been forced to restructure and cut jobs, partially as a result of inflation squeezing consumer spending power, but also a rise in business rates and minimum wages.

Retailer New Look on Wednesday said that it plans to shut 60 stores which could cost almost 1,000 jobs.

Emily Stella, senior retail analyst at GlobalData, said that John Lewis Partenrship had particularly suffered due to a slump in its home department. Many consumers put off big-ticket spending, despite heavy discounting towards the end of the financial year, initiated by Black Friday.

Ms Stella added that connected home devices and wearable technology would likely be a key focus area for the group this year and an opportunity to “gain trust among consumers and ensure it is the partner of choice for premium brands”.

Earlier this week the company also said that weekly sales slumped more than 14 per cent as a result of last week’s adverse weather.

It said that department store sales in the week to 3 March were down 14.4 per cent year on year. Fashion sales tumbled by 18.8 per cent and home wares slid by 17.2 per cent.