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John Lewis profits hit by competition and higher pay John Lewis profits hit by competition and higher pay
(35 minutes later)
Profits have sunk at John Lewis for the six months to July amid what the partnership called "far-reaching" changes in the retail market. Profits at the John Lewis Partnership have been hit by a more competitive retail market and higher staff pay.
Pre-tax profits fell 14.8% to £82.4m, which excludes a charge of £25m on property assets. Pre-tax profits fell 14.8% to £82.4m for the six months to July.
Like-for-like sales at John Lewis stores rose 3.1% during the half year, but fell 1% at Waitrose supermarkets. The group said it expected profits to remain under pressure for the rest of this year and into 2017.
John Lewis chairman Sir Charlie Mayfield said both gross sales and market share had risen. Like-for-like sales at John Lewis department stores rose 3.1% during the half year, but fell 1% at Waitrose supermarkets.
The group blamed "competitive pricing, excellent service, increasing pay and investing for the long term" for the lower profits. Operating profits for John Lewis stores fell 31.2% to £32.4m and slid 28.9% to £96.3m for Waitrose.
Sir Charlie said the EU referendum result had had little impact on sales so far. John Lewis chairman Sir Charlie Mayfield said first-half profits were always lower and often more volatile than the second half of the year, which usually accounts for at least two-thirds of the annual total.
"Instead there are far reaching changes taking place in society, in retail and in the workplace that have much greater implications," he said. He said the group had decided to focus investment in IT, its distribution network and staff pay, as well as concentrating on existing Waitrose stores.
"These decisions form part of our strategy to get ahead of the significant changes that are affecting the wider retail market and we are confident they will position us well for the future," Sir Charlie said.
Total sales and market share were both higher, while the EU referendum result has had little impact on sales.
"Instead there are far reaching changes taking place in society, in retail and in the workplace that have much greater implications," Sir Charlie said.
"Our ownership structure makes it especially important that we manage the partnership carefully and thoughtfully for the long term and our plans anticipate the impact of these bigger changes.""Our ownership structure makes it especially important that we manage the partnership carefully and thoughtfully for the long term and our plans anticipate the impact of these bigger changes."
John Lewis is a employee-owned partnership that shares its profits among its more than 90,000 staff.
In January, staff learned that annual bonuses fell for the third consecutive year to 10% of their annual salary, down from 11% in 2015, 15% in 2014 and 17% in 2013.
The deficit in the partnership's pension fund also soared 54% to £1,45bn compared with the figure in January due to low bond yields.