The John Lewis Partnership has announced a 99 per cent slump in half-year profits.
The company, which owns John Lewis and Waitrose, said its department stores are being squeezed by the "most promotional market in almost a decade", according to Sky News.
It had previously warned it expected to make no profits over the first six months of its financial year which ran until July 28.
John Lewis said it expected its full-year profit to be "substantially lower" than last year for the group as a whole.
Waitrose was on track to grow profit for the full year, driven by a improvement in like-for-like sales from the first to the second quarter and progress in rebuilding its gross margin, it said.
But the growth would be offset by continuing pressure in its department stores and the cost of investing in the business.
Profit at John Lewis's 50 department stores and home shops was squeezed by its pledge to match rivals' prices on a fiercely competitive British high street.
Competitor Debenhams has issued a string of profit warnings and last month House of Fraser was bought out of administration by Sports Direct.
John Lewis Partnership Chairman Charlie Mayfield said the group was "not hunkering down and going on the defensive".
"You don't succeed by retrenching so if anything we are investing more and pushing on with differentiation," he told BBC radio.
"The simple truth is that times like these call for cool heads and really determined ambition."
