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John Lewis Partnership profit up 9.6% before exceptionals

The John Lewis Partnership has reported that profit before bonus, tax and exceptional items rose by 9.6% in the year to 25 January 2014 to reach £376.4 million.

GENERAL MERCHANDISE

John Lewis Partnership profit up 9.6% before exceptionals

Partnership gross sales grew to £10.17 billion which was a 6.6% increase on last year. Revenue, which is adjusted for sale or return sales, was £9.03 billion, rising £562.3 million on the prior year. Like-for-like sales across the Partnership increased by 5.1%.

As a result of the performance, the Partnership’s chairman Charlie Mayfield said the 91,000 partners working across John Lewis and Waitrose will receive a bonus of 15%, equivalent to nearly eight weeks pay.

Looking at the John Lewis department store chain, gross sales rose strongly throughout the year, increasing by 7.5% in total and passing the £4 billion mark for the first time. Like-for-like sales grew by 6.4% while operating profit before restructuring costs rose by 11% to £240.5 million.

The retailer incurred restructuring costs of £14.4 million relating to the streamlining of its department store management structures and the future closure of its Park Royal distribution centre. Operating profit including these costs was up 4.3% to £226.1 million.

John Lewis sales growth was shared across its categories with home sales rising by 2.3%, fashion by 5% and electrical and home technology by 15.5%.

The Partnership said its omnichannel capability and innovation had been key to the department store’s success leading to growth in both its shops and online. Sales at johnlewis.com rose by 19.2% to £1.1 billion with click & collect sales achieving an uplift of 57%. Mobile sales also grew rapidly with visits from phones and tablets now accounting for 50% of traffic to johnlewis.com.

John Lewis also improved its guarantees in the year through its Guaranteed Guarantees programme which gives a minimum of two years cover on any electrical item. In addition, the retailer launched the My John Lewis membership card which attracted 500,000 members in four months.

The retailer opened a new £97 million distribution centre in the year which will begin operations in 2015 alongside the existing Magna Park site in Milton Keynes. 2013 also saw the full refurbishment of the retailer’s High Wycombe shop and the opening of an 'At Home' shop in Ashford.

At the Partnership’s Waitrose supermarket chain, gross sales for the year were up 6% to £6.11 billion with like-for-like sales rising by 5.1%. Operating profit was up by 6.1% to £310.1 million.

The supermarket said the introduction of the My Waitrose loyalty card had enabled it to deepen relationships with customers and helped to increase market share by 0.2%. More than 4.1 million customers now have a My Waitrose card and 68% of sales are to cardholders.

Waitrose.com performed strongly with grocery gross sales up 41.4% in the year as the supermarket continued to invest in its online business by giving the site a new look and making it more tablet-friendly.

In addition, the supermarket nearly doubled the capacity of its branches to fulfil online orders and will increase capacity further in the London area when a second dark store opens in Coulsdon later this year.

The Partnership said 57% of all John Lewis click & collect orders were picked up from Waitrose branches, amounting to 2.5 million collections. Waitrose is currently trialling drive-through collections in five shops and began a pilot for collection lockers last July.

Waitrose opened 13 new branches and relocated two shops, which brought the total number of shops at the end of the year to 305. The supermarket now has 42 little Waitrose convenience shops, five of which were opened last year.

In the year ahead, Waitrose plans to open 38 new branches including 23 little Waitrose shops.

John Lewis Partnership chairman Charlie Mayfield said: "This has been another good year for the Partnership. I am delighted that 91,000 partners will receive a bonus of 15%, equivalent to nearly eight weeks pay. The bonus reflects the balance of a strong trading year, but also the increased costs of pension provision. The exceptional costs of £47 million, relating to holiday pay premiums announced in August, did not affect the bonus percentage."

Looking ahead, Mayfield said that 2014 had started well with gross sales rising by 5.3% in the first five weeks of year. He added: "There are more encouraging signs for the economy as a whole and, although this has not yet come through as a significant increase in consumer spending, I am cautiously optimistic that we will see improvements this year."

 

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