John Lewis boss issues price pledge in 'volatile' environment

The new boss of John Lewis has said the retail giant is already seeing the effect of the Brexit decision - and warned that customers are showing signs of "uncertainty".

Paula Nickolds, who was appointed managing director three months ago, said the fall in the value of the pound has had a "dramatic effect" on the cost of buying products - but also promised that her company would be "the last to move" when it came to passing those rises on to customers.

"To some extent, this is the dog that hasn't barked yet," she said.

"We have hedging positions, to protect us against currency movements, but those are starting to come off now, so we're waiting to see the full impact.

"In the non-food sector, component parts are often imported, even if they're assembled here. But what that will do to prices, I just can't say. But I will say that, John Lewis being never knowingly undersold, we will be the last to move.

"It is very hard to predict what will happen to prices, simply because it varies on country of manufacture, on category, almost product by product.

"It is a very competitive market and I don't believe that the full amount of an increase will be able to be passed on.

"Some items are made here in the UK - furniture and bedding for instance, so they may be somewhat insulated.

"It is possible that, over time, more manufacturing gets repatriated to the UK but that is dependent on UK plc than on our desire - there is less manufacturing here than there was 50 years ago.

"Much will depend on how long the currency situation persists as it is as the moment, and also on logistics."

Ms Nickolds said she had "two significant concerns" around Brexit that she would place most emphasis on - "trading arrangements and the experience of EU nationals working for John Lewis" - but said she did not have a view on the "ideal outcome" of negotiations around the UK's exit from the European Union.

Ms Nickolds did say she had taken over the retailer at a "structurally challenging time" for UK retailers, with a huge rise in online shopping in a "pretty volatile environment".

"Many people have predicted the death of department stores, just as many people have predicted the death of the high street. I don't accept that, but I do think we will have to change."

By 2020, she expects half of John Lewis's sales to be made online, and also said she hopes half of the shop's range will be exclusive own brand products.

The number of new shops will be slowed down, but she retains the commitment to the retailer's famous price-matching promise of never being undersold.

"There is a huge amount of expectation and responsibility. This is a big job, but John Lewis also occupies a place in the heart and minds of our customers," she said.

Ms Nickolds said part of the future of John Lewis would be to help customers to "live well and feel well" and to concentrate on experiences.

"We don't just sell you a mattress, we sell you a great night's sleep," she said.

She made her comments just weeks after the wider partnership, which also includes Waitrose, slashed bonuses despite a leap in profits in a new bid to save costs and focus resources on its customer offering.

John Lewis had previously announced 400 job losses across its restaurants and home fittings service.