Rising sales at its Waitrose supermarkets have helped the John Lewis Partnership to nearly halve its losses over the first half of the year.

The partnership – which includes the John Lewis department stores as well as Waitrose – reported a loss of £30m, down from a £59m deficit last year.

The retail giant said the results were proof that its recovery plan was working, and it expected annual profits to “grow significantly” this year.

However, sales at the John Lewis department stores fell amid a “challenging market”, and it warned that the outlook for consumer spending was uncertain.

The retailer has been trying to win back customers after a tough few years that has seen it cut jobs and close several stores.

In March, it reported its first annual profit after years of losses, but also said it would not pay a staff bonus for the second year in a row.

John Lewis makes the majority of its profits in the second half of the year, which includes the key Christmas trading period.

Announcing the latest results, Nish Kankiwala, chief executive of the John Lewis Partnership, said: “These results confirm that our transformation plan is working and we expect profits to grow significantly for the full year, a marked improvement from where we were two years ago.”

Sales at the John Lewis department stores were down 3% over the first half of the year, with fashion hit by “the well-documented squeeze on customers’ disposable income and unseasonal weather”.

Diana Wehrle, retail analyst at Rendle Intelligence and Insights, said fashion was a “key thing” for John Lewis but they were facing challenges from rival chains. “Marks and Spencer have really upped their game,” she said.

John Lewis said its strategy for boosting the business included the return of its “never knowingly undersold” price pledge, which it announced last week.

It has also agreed a new tie-up with book chain Waterstones, which is set to open in its Oxford Street store in London next month.

Waitrose sales climbed 5% over the half-year, in a period which has seen the first opening of an in-store outlet from Gail’s bakery.

Operating profits at the supermarket chain rose by £75m to £113m over the six months to 27 July.

Waitrose is also planning to open up to 100 new convenience shops over the next five years.

Ms Wehrle said the tie-ups with Gail’s and Waterstones aimed to drive more people into stores and make them stay longer. However, she added it was “not going to significantly move the dial” on sales.

Waitrose has been the “shining light”, she said, and the new convenience stores made sense as “a lot of their offering is designed in smaller portions”.

New chairman Jason Tarry, the former boss of Tesco UK, will join the company on Monday.

The current chairman, Dame Sharon White, announced last year that she would be stepping down after five years in the role.