John Lewis Partnership sees operating profits fall despite 6.4% sales growth
John Lewis Partnership saw an increase of £532.2m (6.4%) in gross sales for last year, however it still saw a fall in group operating profit by £37.7m (8.7%), the company has revealed.
In announcing its financial results for the year, ending 28 January, the partnership, which is made up of both John Lewis and Waitrose, daw group sales grow to £8.73bn, while operating profit fell to £393.3m.
As a result, the partnerships pre-tax profit was down by £14.1m (3.8%) to £353.8m.
Seperately, Waitrose saw gross sales rise by $425.8m (8.6%) to £5.40bn, while sales excluding VAT were up by £372.4m to £5.07bn. However, operating profit fell by £14.3m (5.2%) to £260.6m.
John Lewis also saw its gross sales rise by £97.4m (3%) to 3.33bn, with sales excluding VAT up by £28.1m (1%) to £2.79bn.
However, despite sales also rising by £141.7m (26.3%), operating profit was down by £40.5m (20.4%) to £157.9m
Charlie Mayfield, chairman of John Lewis Partnership, commented: "We have achieved a good sales performance in a tough year for the economy. Profits are lower than last year, but better than expected and I'm delighted to announce that all 81,000 Partners will be receiving a bonus equivalent to over 7 weeks' pay.
“Profound changes are taking place in the retail sector and importantly this was a year when we upped the pace of innovation and investment. That came at the price of some short-term profit but leaves us in a good place at the start of this year.
“Pretty much anything can now be sold online, and our ability to originate and source unique products that our customers want and only we can sell will become more and more important. In Waitrose we increased the number of new products launched by 76%, and in John Lewis, from fashion through to home, we saw the launch of ranges such as John Lewis & Co through to the Design Collective. We also increased our reputation for value with harder hitting promotions in Waitrose, and a total commitment to Never Knowingly Undersold in John Lewis.
“Customers also want more convenience from shops and online and we pushed on with growth, opening more shops in a single year than ever before with 29 Waitrose shops and three for John Lewis. Simultaneously we made it easier to shop across Waitrose and John Lewis - Click & collect has been a huge hit with customers. By the end of the year it was available in 129 shops, up from 55 at the start of the year. Over a fifth of all sales in John Lewis are now online and Waitrose.com was relaunched and extended across London.
“To meet the challenges presented by a rapidly developing retail sector, we've made some significant changes to how the Partnership operates. Examples include overhauling how we run Waitrose shops and expanding our new internal shared services division, Partnership Services, as well as the largest programme of investment we have ever mounted in systems and supply chain.
“We start this year leaner and fitter and have initiatives underway which will deliver key benefits in the coming years. We have first-class brands that are well placed to succeed in a changing market."
Operational highlights by the partnership include the opening of 29 new Waitrose branches last year, the launch of its ‘Love Life’ range of healthy meals and the ‘Click & Collect’ service expanding to all John Lewis shops, as well as 94 Waitrose stores.