Update: Mixed fortunes during first half for John Lewis and Waitrose
- Credit: Archant
The employee-owned John Lewis Parternship today reported a jump in profits for its flagship department stores business, offsetting a weaker peformance from its Waitrose supermarkets.
Operating profits at John Lewis department stores rose by 62% to £56.3million in the six months to July 26, helped by growth in the higher margin home category and in online sales.
At Waitrose, however, profits fell 9% to £145.2m, as a result of higher investment in branches and the impact of challenging trading conditions, which has seen the chaini matching Tesco’s prices on branded products and Sainsbury’s on own-label items. Across the partnership, profits were 12.1% higher at £129.8m.
Chairman Sir Charlie Mayfield said: “The outlook in the grocery sector remains challenging and we expect that to continue to be the case for some time. In contrast, trading conditions in the non-food sector are more positive than has been the case for several years.”
The partnership, which includes twin John Lewis at home and Waitrose stores on the Futura Park retail development in Ipswich and also has Waitrose stores in Saxmundham, Bury St Edmunds, Sudbury, Newmarket and Colchester, plus a “Little Waitrose” convenience store in Ipswich town centre, added today that in the first six weeks of the second half, Waitrose sales were ahead by 0.9% on a like-for-like basis, with the figure for department stores up 9.7%.
The group operates 42 John Lewis shops ? 31 department stores, 10 John Lewis at home outlets and a shop at Heathrow Terminal 2. Waitrose has 326 shops including 51 convenience stores and another 28 shops at Welcome Break locations.
Waitrose opened 15 new branches in the half-year period, compared with four for the same period a year earlier. Sales were 4.1% higher at £3.15bn after a rise of 1.3% on a like-for-like basis.
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John Lewis said: “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.”
It added that being employee-owned allowed it to take a long-term view about the level of investment required for the business.
John Lewis said department store sales were up 9.4% to £1.87bn in the half-year, with the figure on a same-store basis ahead 8.2%.
Home sales were 7.4% higher, while fashion was up 9.1% and electricals and technology delivered growth of 11.7%.
Neil Saunders, managing director of retail consultancy Conlumino, said: “If the John Lewis Partnership were a listed company then it would be the gift that keeps on giving.
“However, if JLP were listed then the results would most likely be very different - for its continued success is underpinned by its capability and willingness to play the long game, even when that means some short-term pain.”