UK retailer, John Lewis Partnership, said the weak pound and higher costs will squeeze its profit this year, in the latest sign of the deepening crisis on Britainâ€™s shopping streets.
The department-store chain warned of further pressure on profits, after earnings-before-exceptional-items fell 22% in the latest fiscal year.
The Ftse-350 General Retailers Index slid as much as 0.7%, with Tesco, Sainsburyâ€™s, Next, and Marks Spencer all lower at one stage.
The warning from the owner of UK grocer, Waitrose, adds to the distress among UK store-owners contending with the rise of Amazon.com and other online retailers, as the Brexit-induced weakness of sterling, and a rise in the minimum wage, lift their costs.
Toys â€™Râ€™ Usâ€™s UK unit, and electronics chain, Maplin, have begun insolvency procedures, while apparel chain, New Look, is shutting stores and cutting jobs in Britain.
â€œWe expect trading to be volatile in 2018-19, with continuing economic uncertainty and no let-up in competitive intensity,â€� John Lewis said. â€œWe, therefore, anticipate further pressure on profitsâ€�. John Lewis cut the bonus it pays employees to 5% of salary, down from 6% a year earlier.
Like other UK retailers, John Lewis has been implementing more flexible working arrangements, in a bid to hold down staffing costs, amid increases in the UKâ€™s minimum wage.
The profitability of Waitrose dropped, as the company decided to improve its competitiveness by not passing on all cost inflation, instead lowering prices on hundreds of products.
Itâ€™s also been revamping stores, adding sushi counters, and other features, at Waitrose stores.
Waitrose is facing intense price competition from larger supermarket groups, Tesco, Sainsburyâ€™s, Asda, and Morrisonâ€™s, as well as from fast-growing German discounters, Aldi and Lidl.
John Lewis said its department stores, however, fared better, with operating-profit-before-exceptional items up 4.5%, helped by stronger fashion and electrical sales.
Bloomberg and Reuters