John Lewis Partnership reports slump in profit
The John Lewis Partnership has reported a steep drop in full year profit after what it described as a “challenging” year.
In the year to 27 January, pre-tax profit at the partnership, which includes the John Lewis department store and Waitrose supermarket chains, fell by 77% to £103.9 million. Revenue was up 1.8% while gross sales rose by 2%.
Sir Charlie Mayfield, chairman of John Lewis Partnership, said: ”As we anticipated, 2017 was a challenging year. Consumer demand was subdued and we made significant changes to operations across the Partnership which affected many partners.
“We said in January 2017 that we were preparing for tougher trading conditions with weakness in Sterling feeding through into cost prices, putting pressure on margin, and much higher exceptional costs as a result of an acceleration of planned changes.”
Waitrose’s gross sales increased by 1.8% to £6.75 billon while like-for-like sales, excluding fuel, edged up 0.9%. Operating profit before exceptional items was down 32.1% to £172 million as the retailer achieved lower margins due its decision not to pass on all cost price inflation to customers.
Gross sales at John Lewis were up 2.2% to £4.84 billion with like-for-like sales growth of 0.4%. Operating profit before exceptional items rose by 4.5% to £254.2 million.
The results have led the Partnership to reduce the partnership bonus to 5% of annual salary which is the lowest level in 63 years, although it said it remains committed to increasing pay rates for non-management partners.
Looking at recent trading, Partnership gross sales were up 0.6% year-on-year in the first five weeks of the financial year. Waitrose like-for-like sales rose by 2.4%, excluding fuel, while like-for-like sales at John Lewis were down 3.4%. Sales at John Lewis were significantly impacted by the heavy snow last week.
