The upmarket department-store chain experienced a 26.8% decrease in underlying profits in the 53 weeks to 31 January and a 3.4% decrease in like-for-like sales.
Things deteriorated further in 2009, with an 8.8% decrease in like-for-like sales in the first five weeks of the year.
The company's managing director Andy Street told Marketing that John Lewis would reduce its marketing budget slightly, but that it would remain the same in proportion to percentage of sales. He added that the money would go further as advertising rates came down.
Over Christmas, John Lewis fared better than a number of its rivals, equalling last year's sales in one of the toughest trading periods in recent memory. It avoided the flurry of pre-Christmas discounting that Debenhams and Marks & Spencer indulged in and instead stuck to its 82-year-old price matching promise ‘Never knowingly undersold'.
In a trading statement John Lewis wrote that it was anticipating price competition to be as intense as last year and that it was well prepared to meet the challenges.
Street said: ‘The best way to deal with the price competition is to stick to our Never Knowingly Undersold promise, because it gives our customers absolute trust in the brand.'
Last month, John Lewis announced that it had awarded its £20m ad account to fledgling agency Adam & Eve, following a two-way pitch against MCBD.
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