John Lewis Partnership Plc’s first-half profit increase of 65 per cent has been partly attributed to customers shopping more at the company’s Waitrose supermarkets.
Net income hit £109 million ($221m) in the six months ended July 28, from £66.1m a year earlier, the London-based retailer said in a statement. Sales gained 6.7 per cent to £3.17 billion. However, the consumer climate will be “much more challenging” in the second half, the company said.
The closely held company's Waitrose chain is increasing its market share and now accounts for four per cent of UK supermarket sales, according to figures supplied by Taylor Nelson Sofres Plc.
“Consumer spending is continuing to hold up well against a backdrop of the recent turmoil in financial markets, higher interest rates and a more subdued housing market,” John Lewis chairman Charlie Mayfield said in the statement.
The John Lewis chain had a “more subdued” start to the second half, with sales rising two percent in the six weeks ended September 8, the retailer said in the statement.
Revenue at Waitrose supermarkets rose 7.1 percent to £1.92bn during the half. Sales at stores open at least a year increased 4.5 per cent in the first quarter, slowing to two per cent in the second, because of wet weather this summer.
The grocery chain's revenue has risen for the past four years, gaining 53 per cent since 2003, compared with an 18 per cent increase across the rest of the John Lewis group.
Gross margins in the supermarket division improved by 0.7 percentage points, according to the statement. The retailer attributed the increase to “the benefits of scale from our larger size and much better stock control”.
Waitrose plans to increase the number of specially trained staff from 200 to 1,000 by investing £1.5m in training.
The results are the first since the company reorganised its management team. In March, Mayfield replaced Stuart Hampson as chairman of the partnership. Then Andy Street and Mark Price were appointed managing directors of the John Lewis chain and Waitrose, respectively.
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