John Lewis' 62% profits soar offsets poor Waitrose first half results

By Jennifer Faull | Deputy Editor

September 11, 2014 | 2 min read

Waitrose’s profits dropped by 9.4 per cent during the first half of the year, despite a 4.1 per cent lift in gross sales to £3.15bn.

Additionally, the supermarket pulled in an average 670,000 more weekly customer transactions and noted a 51 per cent increase in online sales.

Sir Charlie Mayfield, chairman of Waitrose’ parent company John Lewis Partnership, said that the performance was delivered in a period of "significant structural change for UK food retail."

“The decline in profit was mainly as a result of the substantial levels of investment made across the business and, to a lesser extent, the tough market conditions. Like-for-like sales were ahead, despite the market conditions, price investment and strong comparative growth in the same period last year,” he said.

He added that the supermarket is investing in price cuts to match Tesco on branded products (excluding promotions) and Sainsbury's on own-label.

Overall Waitrose’s marketshare grew to five per cent.

Meanwhile, John Lewis reported sales growth and market share increases across all categories – offsetting Waitrose's poor results.

Operating profit increased by 62.2 per cent to £56.3m and gross sales in the first half were up 9.4 per cent to £1.87bn, with like-for-like sales up 8.2 per cent.

Similarly, online sales were up 25.6 per cent to £552m and now represent over 30 per cent of merchandise sales. In-store sales increased by 3.6 per cent.

As a whole, The John Lewis Partnership lifted profits by 12.1 per cent to £129.8m for the six months to July 26.

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Mayfield said that the performance has been “hard won.”

“Looking ahead, as always, much will depend on Christmas trading, plans for which look excellent. While we expect the grocery sector to remain challenging, we anticipate sales at both Waitrose and John Lewis will continue to outperform their respective markets in the second half, reflecting the strength of both brands,” he said.

Today (11 September), Morrisons also revealed that pre-tax profits had plummeted to £239m for the six months to 3 August from £344m a year earlier.


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