A “strong” performance in womenswear led The John Lewis Partnership to a 1.2% sales increase in its fashion division for the first six months of the year but it was not enough to offset a near 99% drop in group earnings.

For the half year ended 28 July, the Partnership reported a 4.1% increase in sales at its womenswear division and a particularly strong performance in own-brand, with sales up 12.3%.

The group has recently launched John Lewis & Partners Womenswear, its largest own brand collection to date and what it calls a “significant step” forward in its plan to build a GBP500m (US$652.4m) own-brand fashion business.

Group revenue, meanwhile, totalled GBP4.86bn (GBP6.34bn), compared to GBP4.78bn, while profit before Partnership bonus, tax and exceptional items tumbled 98.8% to GBP1.2m from GBP96.2m in the year-ago period.

Sir Charlie Mayfield, chairman of the John Lewis Partnership, acknowledged the “challenging times” in retail but noted the group’s profits before exceptionals are in line with what it indicated at its strategy update in June.

“We’re continuing to improve our offer for customers while ensuring we have the financial strength to continue developing our business going forward,” he added.

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“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. The pressure on gross margin has predominantly been from our commitment to maintain price competitiveness. This reflects our decision not to pass on to our customers all cost price inflation from a weaker exchange rate and from our Never Knowingly Undersold promise, where we have seen an unprecedented level of price matching as other retailers have discounted heavily.”

In addition, Sir Mayfield said the Partnership’s profits were impacted by the costs of new shops and higher IT costs as it continued to invest for future growth, and from lower property profits compared to last year.

Looking ahead, the group said with the level of uncertainty facing consumers and the economy, in part due to ongoing Brexit negotiations, forecasting is “particularly difficult”. However, it continues to expect full year profits to be substantially lower than last year for the Partnership as a whole.