John Lewis has reported profits for the first half of of the year are down by nearly 99%.
The retailer has blamed the cost of new stores and IT, coupled with heavy discounts from rivals, for the profit dive.
£40 million went into matching discounts amongst rivals, revealed the department store and Waitrose supermarket chain owner.
The Guardian reports that Sir Charlie Mayfield, chairman of the John Lewis Partnership, said that despite the hit to profits in matching twice as many discount extravaganzas and much deeper discounts across the market – especially in fashion and beauty – the company would be sticking with Never Knowingly Undersold.
“In terms of trust it is extremely valuable,” he said
“These are challenging times in retail. Profits before exceptionals are always lower and more volatile in the first half than the second half. It is especially so this half-year, driven mainly by John Lewis & Partners where gross margin has been squeezed in what has been the most promotional market we’ve seen in almost a decade.”
Stuart McClure, co-founder of LovetheSales.com commented on John Lewis' claims of rival discounts: "Our data corroborates the statement from John Lewis regarding squeezing margins.
"We track over 2 million products and have seen an average fall in prices of 26% for the first half of 2018 compared to the first half of 2017. We've also seen a 20% increase in discounts over the same time period."
John Lewis also noted the lead up to Brexit was creating a level of uncertainty amongst retailers.