John Lewis could face profit hit after heavy discounting
Retailer the John Lewis Partnership may take a £50m hit to profits after slashing prices this summer in the wake of the collapse of House of Fraser.
The Waitrose-owner was forced to cut prices after department chain House of Fraser collapsed into administration leading to mass stock clearance.
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John Lewis, which is reporting its financial results this week, would be “lucky to scrape a profit” retail analyst Nick Bubb told the Mail on Sunday.
The retailer had previously said that profit for the half-year to July would be “close to zero”.
Bubb estimated the impact of price cutting on John Lewis’s profit could reach £20m.
Bubb said that a warm autumn and John Lewis’s policy of matching its high street competitor’s prices could more than double the impact of the heavy discounting.
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“An Indian summer and House of Fraser stock clearance could easily lead to even more discounting damage and, for better or worse, they are totally wedded to their never knowingly undersold promise,” he said.
John Lewis is also spending heavily to improve its online offering, which has a further impact on profits.