The John Lewis Partnership announced a profit rise today - but warned of a tough year ahead due to rising costs and structural changes in the retail industry.
For the year ending 28 January, the Partnership's profit before the bonus, tax and exceptional items, was up 21.2 per cent to £370.4m.
This was largely due to lower pension accounting charges, but when these and other exceptional items were stripped out, profits were up 1.9 per cent on the year before.
Taking into account tax and exceptional items, operating profit at Waitrose and John Lewis fell by 11.3 per cent and 7.5 per cent respectively.
Like-for-like sales at Waitrose were down 0.2 per cent, but rose 2.7 per cent at John Lewis. Gross sales at Waitrose and John Lewis came to £6.63bn and £4.74bn respectively and the £11.37bn total for the group represented a 3.2 per cent sales uplift on the year before.
Why it's interesting
John Lewis is seen as a bellwether for the industry, and it has been making some tough choices to make sure it survives as market conditions worsen. Today, it slashed its staff bonus, one of the key perks for people working at the company (also known as partners), following on from a recent announcement that it would be cutting almost 400 jobs.
The business is under pressure from the shift to online, and weaker sterling, but also from increased labour costs due to the national living wage, which is set to rise in April. But John Lewis said today that it was determined to keep creating "better jobs for better-performing partners on better pay".
What the John Lewis Partnership said
On the outlook for the year ahead, John Lewis said: "Trading pressures will continue as a result of the wider changes taking place in retail.
"The two major influences are pricing, where the rate of change in selling prices is likely to be significantly slower than the rate of change in input costs as a result of weakness in the sterling exchange rate, and the continued shift from shops to online."