John Lewis Partnership (JLP) reported its pre-tax profits fell by 53.3% down to £26.6m in H1, after the company was hit by costs for restructuring of the business.
The changes to the company, which operates John Lewis department stores and Waitrose, are said to be a result of technology changing both the way customers shop and how its staff add more value.
JLP chairman Sir Charlie Mayfield explained the streamlining of operations: "The acceleration of our strategy to ensure the Partnership’s success in the future has included further changes in John Lewis to adapt the business for the future; and moving from divisional to Partnership functions across finance, personnel and IT. As a result, we incurred exceptional costs of £56.4m. Given the key role our Partners play, we are very focused on managing the risk of these changes carefully.”
The huge dip in profits for the period ended July 29 this year has been hinted to be a possible result of the uncertainty surrounding Brexit.
“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.”
The John Lewis business, which operates 48 shops across the UK, including 34 department stores and 12 John Lewis at home outlets, posted a 2.3% increase in gross sales for the trading period. Sales in home categories remained flat, despite what the retailer described as a "tougher market". Electrical and home technology sales were up 2.5% for the half.
Online sales represented 37.3% of total merchandise sales, up from 34.5% last year. John Lewis maintained its investment across all online channels, with the roll-out of mobile-optimised online buying guides and plans to launch digital gift vouchers to customers via its app later this year.
Looking ahead, the retailer said in a statement today that it is confident that a "relentless focus on the customer" and on differentiating its brand from competitors will set John Lewis up for "success in the second half, where the majority of our sales and profit are delivered".