John Lewis Partnership reports fall in full-year profits

The department store group has attributed the decline to higher pension charges and lower property profits.

Excluding these, profits would have climbed 7% in the 52 weeks to January 30, the partnership said.

Partners will received a bonus of 10% of their annual salary, down from 11% last year, and equivalent to five weeks’ pay.

The group said it had delivered “solid sales performance and increased market share in challenging markets”.

Waitrose like-for-likes fell 1.3% while operating profit before exceptionals fell 2% to £232.6m. The retailer said earnings excluding property profits would have been up 2.5% despite “exceptionally tough market conditions and continuing food price deflation, as a result of improved productivity in our branches”.

Gross sales at Waitrose were down by 0.7% to £6.46bn. Market share was up 0.1% to 5.5% and Waitrose grew its customer numbers, notching up 220,000 more transactions a week compared to last year.

Online sales were down 2.9% after a poor first half when Waitrose was competing against the prior year’s promotional-driven period. In the first half online sales dropped 13% but increased 8.3% in the second half.

John Lewis like-for-likes were up 3.1% while operating profit before exceptionals was flat at £250.2m. Excluding property profits, earnings would have been up 0.4%.

Online sales were up 17.3% and now represent 33% of sales. Sales in shops were down 1%.

Fashion revenue increased 6.2%, home was up 4.1% and electricals were up 3%

Since year end Waitrose gross sales were up 3.4%, edging up 0.4% on a like-for-like basis. At John Lewis gross sales were up 5.5% while like-for-likes increased 3.6%.

John Lewis partnership chairman Sir Charlie Mayfield said: “The Partnership has delivered a healthy trading performance and increased market shares in challenging conditions.

“Market conditions were challenging through the year with deflation in grocery of -2.6% and subdued demand in non-food.

“Quality, value and product innovation were therefore all the more important alongside greater convenience and service. Our partners performed well on all those fronts and did so while controlling costs tightly and increasing margin.

“As a result, Waitrose gained market share and grew profits. We attracted more customers while rewarding the loyalty of existing customers through hugely popular initiatives like myWaitrose, which now has six million members.

“In John Lewis we achieved sales growth and market share gains in Fashion, Home and Electricals and Home Technology and an increase in profits.

“Online sales growth was especially strong at 17%, and although sales in shops were down 1%, our results were very much a result of the effective combination of shops and online, demonstrated by the fact that more than three-quarters of our customers made a purchase from one of our shops.”

On the outlook for 2016/17, Mayfield said: “Conditions in the market will remain difficult, especially in grocery. However, given our continued investment in both our operations and the customer offer, I expect sales in both Waitrose and John Lewis to continue to perform comparatively well against the market.”