Weakness of UK high streets exposed with profits in free-fall

Morrisons chief executive wears halving of profits as 'a badge of honour’

FILE PHOTO: Signage is displayed outside a John Lewis & Partners store at the Oxford Street, in London, Britain July 2, 2020. REUTERS/Hannah McKay/File Photo
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The fragile state of Britain’s high streets has been revealed as two retail giants suffer huge cuts to profits and one warns of more store closures.

John Lewis Partnership, which includes the upmarket Waitrose supermarket chain, warned that further closures are expected, on top of cuts announced last year as part of a five-year recovery plan.

Meanwhile, the Morrisons supermarket chain called its halving of annual profits a "badge of honour" in the battle against the pandemic.

Morrisons is trying to find a way out of the crisis by teaming up with Amazon as other retailers also try to find an edge.

“There is no getting away from the fact that some areas can no longer profitably sustain a John Lewis store,” said John Lewis’s chair Sharon White.

FILE PHOTO: Signage is displayed outside a John Lewis & Partners store at the Oxford Street, in London, Britain July 2, 2020. REUTERS/Hannah McKay/File Photo
John Lewis is not expecting to reopen all its stores. Reuters

“Regrettably, we do not expect to reopen all our John Lewis shops at the end of lockdown, which will also have implications for our supply chain.

“We are currently in discussions with landlords and final decisions are expected by the end of March.

“We will do everything we can to lessen the impact and will continue to provide community funds to support local areas.”

The group did not say how many of its 42 John Lewis department stores were under threat.

It made a £517 million ($718m) pre-tax loss for the year to January 30, against a profit of £146m the year before, and expects results to worsen over the coming financial period.

“The coming year is a crucial one in our five-year turnaround of the partnership as we set ourselves back on the path of sustainable profit,” the company said.

Morrisons said on Thursday it made profit before tax and exceptional items of £201m in the year to January 31, prior to a business rates payment of £230m, down from £408m in 2019-20.

"I personally wear a halving of profits as a badge of honour," chief executive David Potts said.

"The British people have had access to food because the supermarket workers, not just Morrisons, were asked by government to be key workers and required to stay open, unlike pretty much the rest of society.

"Frankly we could have made no profit and it would have been a result.”

Morrisons, Britain's fourth biggest grocer after Tesco, Sainsbury's and Asda, said that while its like-for-like sales rose 8.6 per cent on the year, it incurred direct pandemic costs of £290m.

As online sales tripled last year, it is trying to expand its relationship with Amazon.

The Morrisons on Amazon service is now available in 52 towns and cities, and accounts for more than 10 per cent of sales in the majority of stores where the service is offered.