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Traditional retailers feel the squeeze as profits dip at Next and John Lewis

The woes currently faced by British high street retailers has been underlined today as two of the UK’s most high-profile retail brands, John Lewis and Next, posted declining profits in their half-year reports.

John Lewis Partnership, which runs John Lewis and Waitrose, fared particularly poorly in the first half of the year to 31 July, as operating profit for the group fell 58% year-on-year to £113.7m.

Meanwhile at Next, the clothing retailer saw its pretax profits fall by 1.5% owing to a particularly poor performance in its retail division where profits fell a worrying 17% to £133m in what the firm described as a ‘difficult’ trading environment.

The figures highlight the challenging conditions faced by UK high street retailers in the current climate as competitive pricing and competition from online rivals puts a squeeze on even the biggest brands.

Next’s increasing reliance on its online Next Directory business where total sales were up by 7% and operating profit grew by 10.9% to £204.2m is further evidence that traditional retailers are having to rapidly realign their focus from the high street to online shopping.

Sir Charlie Mayfield, Chairman of John Lewis Partnership, was keen to point out that the dip had little to do with the EU referendum, and that John Lewis was reacting to ‘far reaching’ changes in consumer habits as the British public increasingly turn their backs on bricks and mortar stores.

He said: “We have grown gross sales and market share across both Waitrose and John Lewis, but our profits are down. This reflects market conditions and, in particular, steps we are taking to adapt the Partnership for the future.

“These are not as a consequence of the EU referendum result, which has had little quantifiable impact on sales so far. Instead there are far reaching changes taking place in society, in retail and in the workplace that have much greater implications.”

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