Brexit Blamed for Dramatic Fall in John Lewis Profits

A dramatic announcement from the John Lewis Partnership that might have wider implications than just for the JLP partners whose bonuses are likely to be slashed.

The shock fall in pre-tax profits at John Lewis to a large extent is explained by "one-off" restructuring costs as the business has delayed middle management positions and taken other action to reduce operating costs.

However, there has also been a significant fall in underlying profits, which John Lewis management largely blame on rising cost prices following the fall in the value of the Pound post Brexit referendum. 

John Lewis has not yet passed on these cost increases to customers, mainly because it is operating in such a competitive retail environment.

A consequence, therefore, of rising supplier prices is that John Lewis and Waitrose gross profit margins have fallen, leading to a lower operating profit despite the actions taken to reduce costs.

The BBC Radio 4 interview below is well worth a listen to get more insights into the impact of Brexit.