Britain's department stores have been hit by a squeeze in consumers' disposable incomes, higher property taxes and a rise in online shopping, with Debenhams issuing a string of profit warnings and House of Fraser rescued last month by a deal with Sports Direct.

John Lewis also pointed to uncertainty caused by Britain's departure from the European Union, drawing fire from British Brexit minister Dominic Raab, who told BBC Radio 4: "It is rather easy for a business to blame Brexit and the politicians rather than to take responsibility for their own situation."

The group, which has rebranded its department stores John Lewis & Partners and its supermarkets Waitrose & Partners to underscore its employee-owned model, said profit before one-off items slumped 99 percent to 1.4 million pounds in the six months to July 28, hit by its department stores' pledge to match prices at rivals and lower sales of big-ticket items.

The group had warned in June that first-half profits, which are always much lower and more volatile than in the second half, would be close to zero.

"With the level of uncertainty facing consumers and the economy, in part due to ongoing Brexit negotiations, forecasting is particularly difficult but we continue to expect full-year profits to be substantially lower than last year for the group as a whole," it said on Thursday.

Chairman Charlie Mayfield said discounting was at the highest level for a decade, and the number of across-the-board promotions by struggling rivals had doubled year-on-year.

"Considering the devastating impact that delivering its brand strapline 'Never Knowingly Undersold' has had on profits (...) it is no wonder John Lewis & Partners rebranded last week, stepping up its new strategy to shift the focus away from price and on to service," said GlobalData analyst Sofie Willmott.

But Mayfield said the group remained committed to the price matching pledge it introduced in its department stores in 1925, adding the "extremely valuable" promise was even more relevant in a tough market than in a strong one.

John Lewis's 50 department stores and home shops made an operating loss before exceptionals of 19.3 million pounds, hit also by a decision not to pass on all the cost inflation from a weaker pound, it said. Like-for-like sales fell 1.2 percent.

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Mayfield said the market was tough but Britons had not fallen out of love with shopping, and those retailers that invested in their offers and in the customer experience could thrive. "We are determined to be in that camp," he said.

He said the company was investing in own-brand and exclusive products, pointing to early success for its new John Lewis & Partners womenswear collection.

The group said its upmarket Waitrose supermarkets were on track to grow profits for the full year, driven by an improvement in like-for-like sales from the first to the second quarter and progress in rebuilding its gross margin.

But that would be offset by continuing pressure in its department stores and the cost of investing in the business.

Gross sales at Waitrose were 3.39 billion pounds in the first half, up 2.6 percent on a like-for-like basis, while sales at John Lewis were 2.09 billion pounds.

(Reporting by Paul Sandle and Andrew MacAskill; Editing by Keith Weir and Mark Potter)

By Paul Sandle