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John Lewis Partnership posts fall in full year profits

Friday March 11th 2016

The John Lewis Partnership has reported that its full year pre-tax profit excluding exceptional items fell by 10.9% to 305.5 million after it was impacted by higher pension charges and lower property profits.

As a result, 91,500 employees of the John Lewis department store and Waitrose supermarket chains will be paid a bonus of 10% of their salary, which is down from the previous year’s 11%.

Sir Charlie Mayfield, chairman of John Lewis Partnership, commented: “The partnership has delivered a healthy trading performance and increased market shares in challenging conditions. Although profit before tax and exceptionals was down by 10.9% on last year, that was entirely due to higher pension charges arising from volatility in the market-driven assumptions, and lower property profits. Excluding these, our profits were around 7% up on last year which, together with a strengthening balance sheet, represents good progress over the year.”

In a statement, the partnership said the John Lewis department store chain had outperformed the market in uncertain trading conditions, with gross sales up 2.8% to £4.56 billion in the year to 30 January.

Operating profit was down 0.1% to £250.2 million but excluding property profits was up 0.4%. The retailer said profit was held back by restructuring costs and the absorption of a greater share of centrally incurred functional costs.

During the year, the retailer continued to invest in its shops, website and infrastructure.

Online sales increased by 17.3% while sales in shops were down 1%. Click & collect orders grew by 11% and accounted for 53% of online orders, while sales through mobile devices climbed by 34% and smartphones by 86%.

Meanwhile, operating profit at Waitrose fell by 2% to £232.6 million but excluding property profits was up 2.5%.

Gross sales were down by 0.7% to £6.46 billion with like-for-like sales down 1.3%. The supermarket said it grew its customer numbers in the year and had, on average, 220,000 more customer transactions a week compared to last year.

The popularity of click & collect increased, with collections of John Lewis orders from Waitrose up by 19%, and 70% of all click & collect orders picked up from Waitrose branches.

The partnership said like-for-like sales at the John Lewis department stores were up 3.6% in the first five weeks of its new financial year, and up 0.4% at Waitrose.

Looking ahead, 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.”