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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. It also announced it would change the names of its stores to John Lewis & Partners and Waitrose and Partners.
The retailer said its Waitrose chain would close five shops.The retailer said its Waitrose chain would close five shops.
The John Lewis Partnership is owned by its 84,000 staff known as "partners".
The group currently has 353 Waitrose outlets and 50 John Lewis department stores.The group currently has 353 Waitrose outlets and 50 John Lewis department stores.
The name change to Waitrose & Partners and John Lewis & Partners was intended to emphasis the importance of the partners to differentiating the group from other retailers, the company said.
The rebranding will begin in September with London's Oxford Street store.
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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 named 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.
Bonus cutsBonus cuts
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".
It said it was assuming that profits before exceptional items would be "substantially lower" than last year's £290m.It said it was assuming that profits before exceptional items would be "substantially lower" than last year's £290m.
While profits are expected to grow at Waitrose, the John Lewis department stores are expected to see profits decline this year.While profits are expected to grow at Waitrose, the John Lewis department stores are expected to see profits decline this year.
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. In March, John Lewis Partnership 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.
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.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.Retail experts have said one solution is to offer "experiences" that shoppers cannot get online.
For John Lewis, one example of that is personal shopping.For John Lewis, one example of that is personal shopping.
The new John Lewis store in Shepherd's Bush in west London has a team of six personal shoppers in fashion.The new John Lewis store in Shepherd's Bush in west London has a team of six personal shoppers in fashion.
Plumbing plansPlumbing plans
According to a spokeswoman customers who used the service spent on average 30% more a year following their appointments, than people who had not used it.According to a spokeswoman customers who used the service spent on average 30% more a year following their appointments, than people who had not used it.
The six personal shoppers generated one fifth of the total womenswear sales in the store, she added.The six personal shoppers generated one fifth of the total womenswear sales in the store, she added.
John Lewis also plans to build a presence the home services market, including plumbing and electrical work, as well as financial services.John Lewis also plans to build a presence the home services market, including plumbing and electrical work, as well as financial services.
Sir Charlie Mayfield, chairman of the John Lewis Partnership, said: "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. " Sir Charlie Mayfield, chairman of the John Lewis Partnership, said: "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."
The name change to Waitrose & Partners and John Lewis & Partners was intended to emphasis the importance of the partners to differentiating the group from other retailers, the company said. However, the group added, the changes it was making relied on "sustained investment".
It said it would raise £500m by over three years to invest in "product and service innovation".
It said it would achieve this by "rebuilding profitability at Waitrose", getting more out of its property, by putting space it does not need to other uses, and "conducting a review of the partnership's pension scheme".