Pre-tax profit for the six months to 30 June was £90.4m, down 18.2% on the same period in 2010.
The retailer says that John Lewis’ “Never Knowingly Undersold” – which promises to match competitors’ prices – cost it £9.3m more than in same period last year, shrinking profit margins as rivals turned to discounting to attract cash strapped shoppers.
Investment in ecommerce platforms and new stores also hit profit, the retailer says. Adam & Eve produces the ads for the price promise.
Despite the drop in profit, sales volume at both John Lewis and Waitrose continued to grow, helped by their more affluent customer base.
Sales at John Lewis stores opened for a year or longer increased 1%, while like for like food sales at Waitrose grew 4%.
The Partnership claims that 300,000 more customers shopped at Waitrose each week, compared to last year, and market share increased by 0.2% to 4.1%.
Charlie Mayfield, chairman of the John Lewis Partnership, says trading conditions will remain “challenging” this year and next but that John Lewis and Waitrose will continue to outperform rivals.
He adds: “We are not simply waiting for the recovery, but instead we have increased the pace of investment and innovation across the Partnership putting us in the best possible position to seize the opportunity created by a rapidly changing retail environment.
“Our momentum is strong and I am confident we will build on that in the second half.”
View and comment on a range of John Lewis ads, including the Blades winning Christmas 2010 TV ad, on Pitch here