Profits have increased at Waitrose, offering positivity to parent company John Lewis Partnership at a time when much of its business is struggling.
The upmarket retailer reported group revenue of £10.3 billion in the 52 weeks to 26 January, a one per cent increase on the previous year. Sales at Waitrose & Partners rose 1.2 per cent to £6.4bn and at John Lewis & Partners 0.7 per cent to £3.9bn.
However operating profit fell 39 per cent across the group, despite an 18.1 per cent increase at Waitrose, a situation chairman Sir Charlie Mayfield attributed to a challenging year in non-food. John Lewis suffered from weaker Home sales, gross margin pressure, higher IT costs, the property impact of new shops and lower profit on asset sales.
At Waitrose, positivity came from significant investment in Waitrose.com, new customer smartphone apps and customer delivery services, which brought a 14 per cent increase in online grocery sales.
Mayfield said Waitrose launched more than 5,000 new or updated products during the year, including extensive vegetarian and vegan ranges, and completed 24 range reviews to remove duplication, develop a clearer offer and increase differentiation with competitors.
The Waitrose & Partners Foundation, which works to improve the lives of growers, pickers and packers of fresh produce, has also been expanded to seven countries with the addition of Costa Rica, Senegal and The Gambia.
As part of its long-term plan Mayfield said the group needs to invest £400-500m annually to combat tough market conditions, and also announced that five more Waitrose shops will be sold to other retailers as part of its plans.
On Brexit, Mayfield said: “We have been preparing for the operational implications of Brexit for well over a year, and are in a good position for a managed transition. This covers currency, tariffs, customs and labour. The main risk in an unmanaged transition is a strong fall in consumer confidence and the impact that has on trade.
'Given the current level of uncertainty, we expect 2019 trading conditions to remain challenging. We have built up a strong liquidity position at nearly £1.5bn so that we have the financial headroom to mitigate the risks and make sure we can continue investing for the future.”
