Pension costs hit John Lewis

It said trading at its Waitrose supermarket chain came under pressure amid “turmoil” in the sector, with comparable store sales down 1.3​ per cent​ - the first fall for seven years.

The partnership said underlying profits sunk to £96​m in the six months to August 1 as recent stock market woes impacted its pension fund and left it facing higher charges.

It said that after stripping out these costs and one-off boosts from property sales last year, trading profits were broadly level in the first half as a ​three per cent​ rise in sales at its department store chain helped offset the supermarket woes.

But it said supermarket trading was set to remain tough as the major players wage a fierce price war to compete with the increasing might of discounters Aldi and Lidl.

The difficult trading and an extra £60​m of pension fund charges this financial year are expected to drive annual pre-tax profits to between £270​m and £320​m against £342.7​m previously.

Sir Charlie Mayfield, chairman of John Lewis Partnership, said: “Conditions in the market will remain difficult, especially in grocery where there is little sign of any price inflation.”

He added: “For the full year, pension charges will be approximately £60​m higher than the comparable figure last year, predominantly arising from volatility in the market-driven assumptions.

“In the current market, even a strong trading performance is unlikely to offset this fully.”