The retail giant said the credit crunch had crushed consumer confidence, which slowed sales.
Its pre-tax profits fell 26.6% to £107.3m in the six months to July.
Operating profits at its John Lewis stores fell 34.4% from £40m to £21m, while its Waitrose food stores took less of a hit; operating profits fell 8.4% to £102.7m.
Waitrose’s underlying operating profit, excluding property profits dropped 3.2% to £100m.
Chairman of the John Lewis Partnership, Charlie Mayfield admitted ‘the outlook for the coming six months and 2009 remains challenging.’
He said: ‘After the initial shock of the credit crunch last summer, the economic climate has become progressively more difficult, consumer confidence has hit a record low and the retail market has slowed markedly.
‘Our first half performance reflects the challenging trading environment, our response to those conditions, a particularly strong performance in the first half of 2007 and our continued investment in growing and developing our business.’
But he added: ‘Out partners are highly committed and with our long-term approach to our business, we are well positioned to take advantage of the recovery in confidence when it comes.’