MORE than 14 months on from the UK’s vote to leave the European Union, the after-effects are continuing to be felt.
In what now feels like a daily occurrence, another major retailer has laid out in stark terms the impact Brexit is having on the high street.
Thanks to rampant inflation sparked by the collapse in sterling following the vote, costs have been cranked up for retailers importing goods from abroad. Even darlings of the high street such as John Lewis are feeling the strain.
Sir Charlie Mayfield, chairman of the employee-owned partnership, made no bones about it yesterday. Brexit is having an effect on the economy, he said bluntly, not just because of the inflation triggered by the vote but the uncertainty trailing in its wake. And businesses really don’t like uncertainty.
Of course, it might be said this is old news. John Lewis is just one of a growing number of retailers to express such sentiment, and to feel the effects on the bottom line.
But just because something happens a lot does not make it any less important. John Lewis was less profitable in the first half because its costs were higher and because people didn’t have the same confidence to spend as they used to. Worryingly, it doesn’t see the situation improving any time soon. The company said the prevailing conditions will have an effect on its profits for the year, with Sir Charlie expecting the “headwinds that have dampened consumer demand and put pressure on margins to continue into next year”.
The retailer’s first-half results come with a caveat, though. That profits sunk to the extent they did was down in large part to some hefty exceptional charges. Steps have been taken by the company to restructure operations as it seeks to meet consumers’ changing needs, some of which has led to cuts in managerial jobs.
While these costs may be regarded as one-offs, the upheaval brought by Brexit is going to linger for a good while longer.
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