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John Lewis warns of zero first-half profit John Lewis warns of zero first-half profit
(about 1 hour later)
John Lewis Partnership, which owns John Lewis department stores and the Waitrose supermarket chain, has warned that profits in the first half of the year will be "close to zero".John Lewis Partnership, which owns John Lewis department stores and the Waitrose supermarket chain, has warned that profits in the first half of the year will be "close to zero".
Last year the group made £26.6m in the first half, and blamed heavy investment for this year's expected fall.Last year the group made £26.6m in the first half, and blamed heavy investment for this year's expected fall.
The company also warned over full-year profits, saying they could be "substantially lower" than last year.The company also warned over full-year profits, saying they could be "substantially lower" than last year.
The retailer said its Waitrose chain would close five shops.The retailer said its Waitrose chain would close five shops.
Two Little Waitrose stores will close in Manchester, one in Birmingham and one in central London. It will also shut its supermarket in Camden in London.Two Little Waitrose stores will close in Manchester, one in Birmingham and one in central London. It will also shut its supermarket in Camden in London.
The company also said that from September the two brands would be renamed Waitrose & Partners and John Lewis & Partners.The company also said that from September the two brands would be renamed Waitrose & Partners and John Lewis & Partners.
In a statement John Lewis said it was widely acknowledged that the retail sector was going through a period of "generational change".In a statement John Lewis said it was widely acknowledged that the retail sector was going through a period of "generational change".
Its response would be to focus on "greater differentiation - not scale" and invest more in developing "unique" products and services, as well as placing more emphasis on its own brand.Its response would be to focus on "greater differentiation - not scale" and invest more in developing "unique" products and services, as well as placing more emphasis on its own brand.
It said it would continue to invest at a rate of £400m-£500m per year.It said it would continue to invest at a rate of £400m-£500m per year.
While it does not expect to make any profit in the first half of the year, for the full year it said there were a "wide range of possible outcomes, given the market uncertainty".While it does not expect to make any profit in the first half of the year, for the full year it said there were a "wide range of possible outcomes, given the market uncertainty".
However, it said it was assuming that profits before exceptional items would be "substantially lower" than last year. However, it said it was assuming that profits before exceptional items would be "substantially lower" than last year's £290m.
In March, John Lewis Partnership, which is owned by its 84,000 staff known as "partners", announced that bonuses had been cut for the fifth year in a row. Employees got a 5% bonus, down from 6% last year and the lowest since the 4% paid out in 1954.
'Personal service'
Many retailers have come under pressure in recent months as a result of an increase in online shopping and lower footfall on High Streets, combined with rising costs and a fall in consumer confidence.
Retail experts have said one solution is to offer "experiences" that shoppers cannot get online.
In its statement John Lewis reflected this trend, saying its focus for its department stores would be on three key areas "unique products, personal service and expanding into new services".
Sir Charlie Mayfield, chairman of the John Lewis Partnership, said: "As retail changes we need to tread a path that enables us to thrive as a business while building on the qualities that make us different.
"For us, the relentless pursuit of greater scale is not the right course. Our plans put differentiation, innovation and Partner led service at the heart of our offer. "