John Lewis warns on profits and reveals plans to close five Waitrose stores

The group, which is hosting a strategy day, said it does not expect to make a half-year profit, while profits for the full year will come in "substantially" lower than last year.

It bemoaned "market uncertainty" and cited significant extra costs at the partnership as a result of "greater IT investment", which will be a driver of the profit decline.

Waitrose will shut four convenience shops and one small supermarket, affecting around 200 staff.

Aldi will acquire Waitrose's store in Camden, London, where 68 staff are located.

However, the supermarket will shut while Aldi re-fits the store for around six months, meaning Waitrose will try to relocate staff.

The Co-op is picking up Waitrose convenience stores in Colmore Row in Birmingham, Manchester Piccadilly, Spinningfields in Manchester and Portman Square, London.

The Waitrose workers in these stores will transfer to the Co-op.

Sir Charlie Mayfield, chairman of the John Lewis Partnership, said: “It is very important that we feel the jeopardy of what is happening right now.

“This isn’t a blip, it is a major shift and it has a while to run.”

The company pointed to “market uncertainty” and cited significant extra costs at the partnership as a result of “greater IT investment”, which it said will be a big driver behind the profit change.

Waitrose is expected to see profit growth and John Lewis a decline.

The company has a landmark shop at the Grand Central shopping centre above New Street Station in Birmingham, as well as department stores in Solihull and Tamworth. It’s upmarket Waitrose supermarkets has branches in Wolverhampton and Stourbridge.

The firm added: "It is widely acknowledged that the retail sector is going through a period of generational change and every retailer's response will be different. For the Partnership, the focus is on greater differentiation - not scale.

"We have clear plans to build on our strengths and to sharpen our points of difference in both Waitrose and John Lewis."

Retailers have been hammered by rising costs and falling consumer confidence, with several high-profile casualties this year resulting in hundreds of store closures.

Patrick Lewis, group finance director, said the John Lewis Partnership hoped to start increasing its profits again from 2019 onwards.

For the financial year-to-date, Waitrose's like-for-like sales have grown 1.5%, while John Lewis' like-for-like sales have been flat.

Outlining its strategy for the future, John Lewis Partnership said it aimed to compete “through differentiation and innovation, not scale”.

The company is co-owned by its workforce, called partners, but this year their bonus was cut to the lowest level for 64 years after profits plunged 77per cent at the group after a ‘challenging’ year.

The company says it will continue to invest in the business at a rate of £400m-£500m per year and take further steps worth £500m over three years to strengthen the balance sheet, “while recognising the short-term pressure on profits”.

The plans will see Waitrose focus on its core customers and on its online supermarket business, which has seen sales grow 21 per cent - higher than any established grocer. At John Lewis, the focus will be in three key areas - unique products, personal service and expanding into new services. “Key to this is supercharging women’s fashion, acquiring new niche brands, securing exclusives with international brands and significantly growing design capability,” said the company. “Currently 30 per cent of John Lewis’s sales are from products that are own-brand and exclusive products. Our ambition is to increase this to 50 per cent.

“And John Lewis will expand beyond shops and online into new and enhanced services, with a focus on strengthening its position in the home services market and growing financial services. The acquisition of home improvements business Opun earlier this month is one step in this direction.”

Sir Charlie Mayfield added: ‘The John Lewis Partnership is a unique business with different ownership, a different purpose and a different outlook to any of our competitors. As retail changes we need to tread a path that enables us to thrive as a business while building on the qualities that make us different.

“For us, the relentless pursuit of greater scale is not the right course. Our plans put differentiation, innovation and Partner led service at the heart of our offer. The measures that we have outlined today are an important next step in our strategy that will ensure we emerge stronger from this period of profound change.’

The Partnership operates 50 John Lewis shops across the UK, 353 Waitrose shops in the UK and abroad and employs 85,500 staff .