John Lewis and Waitrose have confirmed their position as two of the biggest winners on the high street amid Britain’s economic downturn with a 60pc rise in profits.
The John Lewis Partnership (JLP), owner of the department store chain and upmarket supermarket, said pre-tax profits rose to £144.5m for the six months to July 28 despite Britain slumping into a double-dip recession.
Like-for-like sales rose 2.2pc for Waitrose and 9.2pc for John Lewis, a significant outperformance of their rivals.
Charlie Mayfield, chairman of JLP, said the retailer has been boosted by the Diamond Jubilee, the VAT increase depressing sales in 2011, and the build-up to the Olympics and Paralympics in London, for which John Lewis was a sponsor and sold official merchandise.
“Look at the Olympics this year compared to the riots last year, the mood couldn’t be more different,” he added.
A “really key” factor in the growth of Waitrose and John Lewis has been a drive to promote the affordability of the retailers’ products, according to Mr Mayfield.
Waitrose has launched a brand price match scheme and its own low-cost brand, while John Lewis is benefiting from its “Never Knowingly Undersold” slogan that matches the prices of rivals and has supported a 31.8pc rise in electricals and home technology sales.
“We are fundamentally better at getting the message across that Waitrose is a place for a weekly shop,” Mr Mayfield said.
Since the end of the half-year, which also marked the start of the Olympics, Waitrose like-for-like sales growth has accelerated to 4.5pc while John Lewis edged down slightly to 8.5pc.
Mr Mayfield said the company “did not see an issue” with footfall during the Olympics. But he said the consumer outlook remained “fragile”.
Waitrose boss Mark Price is expecting to deliver the highest operating margin of all the major food retailers this year, after reporting a bumper increase in half-year profits today.
The upmarket supermarket reported a 28.9% increase in operating profits to £142m for the six months to 28 July. That came alongside a 2.2% increase in like-for-like sales, as total turnover grew by £172.8m to £2.8bn.
The sharp increase in profits was partly due to the favourable comparison with last year, when Waitrose made costly investments in convenience, waitrose.com and stores in the Channel Islands. But Price said the important figure was the operating margin, which he claimed led the grocery market.
“If you look at The Grocer’s table of the top 100 grocery retailers this week, our 5.4% operating margin is well ahead of the market,” he said.
“I’m confident that by the end of the year we’ll have the highest operating margin of all the major food retailers in the UK.”
Waitrose also reported a 50% increase in online sales for the half-year – boosted by the revamp of the website made in March last year and opening of a dark store in Acton, London.
It was also a good six months for Waitrose parent the John Lewis Partnership. Profits before tax rocketed by almost 47% to £163.5m. Total sales grew 8.7% to £4.4bn.
Waitrose and John Lewis have been working closer together over the past year, with John Lewis products now available through click & collect at most Waitrose stores.
Meat Trade News Daily Supporting British Pig Farmers
Source: Argentine Beef Packers S.A.
Back to News Headlines