John Lewis warns on no-deal Brexit as it loses £25m in six months

Oscar Williams-Grut
Senior City Correspondent, Yahoo Finance UK
John Lewis blamed 'subdued consumer confidence' for its drop in profits. Photo: Toby Melville/Reuters

John Lewis Partnership has announced a loss of £25m in the first half of the year, as it warned that a no-deal Brexit would have a “significant” negative impact.

John Lewis Partnership, which owns both the department store and supermarket Waitrose, said on Thursday that it made a loss before exceptional charges of £25.9m in the six months to July 27.

The loss compares to a £800,000 profit in the same period last year. Last year’s token profit was a 99% fall on the year earlier, pointing to the prolonged slide suffered by the company.

On a statutory basis, the partnership made a pre-tax profit of £191m but this was down to the sale of property and accounting gains. Sales at John Lewis and Waitrose fell by 1.2% to £5.4bn in the first half.

Sir Charlie Mayfield, chairman of the John Lewis Partnership, blamed the slump on having too much retail space and “subdued consumer confidence.”

The partnership makes most of its money in the second half of the year, with Christmas a key period for both John Lewis and Waitrose.

READ MORE: John Lewis staff bonuses fall as profit crashes by 45%

However, Mayfield said “conditions have continued to be difficult” and warned that Brexit uncertainty would likely hit trading in the second half.

“Brexit continues to weigh on consumer sentiment at a crucial time for the sector as we enter the peak trading period,” Mayfield said.

“Should the UK leave the EU without a deal, we expect the effect to be significant and it will not be possible to mitigate that impact.”

Sales are falling at both John Lewis and Waitrose but the department store is suffering more than the supermarket.

John Lewis sales fell by 1.8% in the first half of the year to £2.05bn. Losses grew by 4.2% to £34.9m.

Waitrose sales fell by 0.8% to £3.36bn but profits rose by 6.8% to £100.8m.

Nick Bubb, an independent retail analyst, said: “The loss at John Lewis worsened significantly, on the back of like-for-like sales of -2.4% and more margin and cost pressure.”

John Lewis has been battling with the decline of physical retail in favour of online shopping and the shunning of department stores more generally. Rivals BHS, House of Fraser, and Debenhams have all fallen into administration in recent years.

Profits at John Lewis fell by 45% last year and the company was forced to cut its staff bonus to a 55-year low.