The John Lewis Partnership, which owns the Waitrose supermarket chain, reported a return to annual profit that reflected improved trading in its food business and cost savings, and forecast further improvement in the current year.
But for the second straight year there was no bonus for the UK group's 76,000 staff, or partners as it calls them.
Chairman Sharon White, who is stepping down in 2025 having decided not to seek a second term of office, warned in September that her turnaround plan for the employee-owned group would take two years longer than originally forecast due to inflationary pressures and greater than expected investment requirements.
“We have made significant progress in the last year to return the business to profitability and delivered results that allow us to increase investment in our retail businesses; we expect profits to grow further this year," White commented in a statement.
Increased Investment
The partnership, which runs John Lewis department stores and the Waitrose supermarket chain, said that it plans to step up investment in 2024-25 to £542 million (€634.14 million), from £312 million (€365.04 million) in 2023-24. It will also spend £116 million (€135.72 million) on higher staff pay.
The partnership made a profit before tax and exceptional items of £42 million (€49.14 million) in the year to January 27, versus a loss of £78 million (€91.26 million) in 2023-24.
Sales Performance
Total sales rose 1% to £12.4 billion (€14.49 billion), with Waitrose sales up 5% to £7.7 billion (€9.01 billion) but department store were sales down 4% to £4.8 billion (€5.61 billion).
On the performance of Waitrose, which has now delivered eight consecutive quarters of growth in terms of customer numbers, the group said, 'Sales growth, combined with strong delivery of productivity programmes across stores, cost of goods and supply chain underpinned this improvement. For the full year, volume was down 1.5% and average item price up by 6.6%.'
Analyst Comment
Commenting on the group's performance, Eleanor Simpson-Gould, senior retail analyst at GlobalData, said, “Waitrose & Partners’ performance in this financial year has been significantly better than the last, with the premium grocer reporting close to 20% growth in operating profit for the year. This profit was cultivated by improved productivity in its supply chain and sales growth.
The premium grocer successfully engaged customers in the second half of the financial year with lower prices, leading to growth in store transactions of 6.8% for the year. Despite continued investments in its 'New Lower Prices' campaign that launched in February 2023, the average item price increased by 6.6%, while volumes dropped by 1.5% for the full year.
"Yet, investment in lowering prices has resulted in a reported volume uplift for the grocer in the final four months of the financial year, showing promise that Waitrose & Partners’ slow start to roll out price cuts may finally be paying off."
Additional reporting by ESM.
