John Lewis is underselling its profits

The retailer John Lewis is famous for its pledge to never be undersold, and this is causing the retailer a great deal of trouble this season. The pledge has meant that the profits of the company have fallen by some £20 million as it tries to keep up with the many discounted products that are on the market.

This is a drop of nearly 20% when you compare it with the profits of the year before. Charlie Mayfield is the chairman of John Lewis and has said, “We are seeing these drops because we are continuing to offer great value to our consumers, and we are sticking with our pledge. The highly competitive environment we are seeing has led to a drop in profits.”

The report has also stated that the supermarket Waitrose has managed to absorb the inflation impact and is even taking on retail giant Tesco with its ‘brand price match.’ The drop in profits was announced at the same time as John Lewis and Waitrose announced that sales figures were up. This really shows how competitive pricing in the market is right now.

Mayfield has also said, “Sales wise, we have seen a strong growth in the first half of the year. We have continued with our ambitious growth plans and this, combined with the competitive market, has meant that we are seeing an expected fall in profits.” These growth plans have seen a large amount of capital put into them and the new shopping location near the site for the Olympic Games is an example of this.

The John Lewis group has always taken a long term outlook, rather than just focusing on short term profit maximisation. This is something that has benefited the business in the long term, according to its current chairman.