UK Retailers Wobble In Worrying Sign For OZ
Profits at the UK retail group John Lewis Partnership who have been quietly expanding their appliance and consumer electronics offering is struggling.
The group that last year targeted the Australian market for growth via their online store has witnessed a 77% decline in profits as they struggle to battle online operations such as Amazon.
While both sales and customer numbers rose at the group’s department stores in the year to January 27, pre-tax profits fell 77 per cent after taking into account staff bonuses, these are now being trimmed.
The company’s results build on a run of negative news from the sector, with retailers struggling to adjust to a squeeze on household budgets from high inflation and lacklustre wage growth, combined with pressure from rising business rates and higher costs claims the Financial Times.
“2017 was a challenging year”, chief executive Sir Charlie Mayfield sais.
The group said it expected volatility to continue, “with continuing economic uncertainty and no let up in competitive intensity”, which was likely to weigh further on profits.
High street chains across a number of products have reported difficulties in recent weeks. Fashion outlet New Look announced a deal with its creditors on Wednesday; electronics retailer Maplin and the UK arm of Toys R Us collapsed on the same day last week, Mothercare says it is in talks with its lenders, with “profound” pressure on the sector, and department store Debenhams announced in February it was axing hundreds of shop manager roles as part of a cost-cutting exercise, echoing moves by Tesco and Sainsbury’s.