JOHN Lewis posted a sharp drop in profits after its “never knowingly undersold” promise meant it had to match heavy discounting by rivals.

The Partnership, which is owned by its 76,500 staff, reported a 55% fall in operating profits to £15.8m at its department stores division, despite a 1% increase in like-for-like sales in the six months to July 30.

Its Waitrose supermarket arm lifted sales by 8.7% to £2.6bn, but profits dropped by 13.8% to £110.2m due to customer offers and investment in future growth, including new stores. Total half-year profits fell by 18% to £91.2m.