Sales at the John Lewis Partnership grew over Christmas but the group warned that profits will be dragged down by attempts to maintain competitive against its rivals.
The department store saw like-for-like sales grow 3.1% in the six weeks to December 30, while its sister company Waitrose booked a comparable sales rise of 1.5%.
But chairman Sir Charlie Mayfield said that the John Lewis commitment to being “never knowingly undersold” – the chain’s price matching promise – alongside soaring costs linked to the Brexit-hit pound, will dent full-year profits.
“The pressure on margin seen in the first half of the year has intensified because of our choice to maintain competitive prices, despite higher costs mainly due to the weaker exchange rate.
“This will negatively affect full-year financial results as indicated previously,” he said.
The plunge in sterling following the referendum has driven up costs for businesses and destroyed consumer confidence, hammering retailers in particular.
Sir Charlie said that he expects trading to be “volatile” this year due to the economic environment and structural changes taking place in the retail industry.
Sir Charlie Mayfield (Jonathan Brady/PA)
In better news, John Lewis said the Black Friday week was the busiest in its history and included a record hour for online trade.
At Waitrose, the firm said it created a “real festive buzz” as it launched 500 new products, such as Heston Citrus Sherbert Lazy Gin, which sold a month’s worth of stock in one day.
Gross sales at the Partnership were up 2.5% versus last year to £1.96 billion.
Waitrose booked a 1.4% increase in gross sales to £928 million, while John Lewis recorded a 3.6% rise to £1 billion.