John Lewis Partnership profits down 53% after spike in costs

John Lewis Partnership profits down 53% after spike in costs

Profits before tax at John Lewis Partnership fell by 53.3% to £26.6m for the first six months of the year as costs increased as part of reorganising the business.

Before exceptional items, profit before tax fell by 4.6% to £83m. The £56.4m in exceptional items included £22.6m in restructuring and redundancy costs across the group.

For the John Lewis brand, operating profits were up 10% but 18% down for Waitrose. The company said Waitrose’s performance was down to "lower margin due to higher costs prices".

Gross sales across the group grew by 2.3% to £5.4bn, with Waitrose and John Lewis gross sales both up by 2.3%. Both brands increased customer numbers too, the company added. 

Sir Charlie Mayfield, chairman of John Lewis Partnership, described the brands as performing solidly in a "difficult market. 

He added: "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.

"Against that backdrop, our market share gains in fashion stood out. The exchange rate driven increase in cost prices has also put pressure on margin. We have chosen to hold back on increasing prices across many areas."

However, Mayfield warned that "headwinds that have dampened consumer demand" will continue into next year and that the company will incur higher pension account charges in the second half of 2017, all of which would impact its full-year profits. 

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