IT investment blamed for John Lewis ‘zero’ profit warning

John Lewis Partnership has warned half-year profits this year will be “close to zero”, blaming significant extra costs, including IT investment for the slump. The retailer announced it expected to see profit growth in Waitrose, but a decline in John Lewis.

Last year the owner of John Lewis and Waitrose reported a £26.6 million profit before tax for the first half of 2017, but further investments will impact this year’s numbers.

The retailer insisted it won’t stop investing, with £400 million - £500 million planned per year, with a further £500 million invested into product and service innovation over the next three years in hopes to strengthen the partnership’s balance sheet.

“The John Lewis Partnership is a unique business with different ownership, a different purpose and a different outlook to any of our competitors,” explained Sir Charlie Mayfield, chairman of the John Lewis Partnership.

“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. The measures that we have outlined today are an important next step in our strategy that will ensure we emerge stronger from this period of profound change.”

In the strategy announcement made on 27 June, the retailer also revealed it would be rebranding its stores to ‘John Lewis and Partners’ and ‘Waitrose and Partners’.

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