John Lewis profit up 20pc – but warns of tough 2011

Retailer John Lewis said it would pay over 73,000 staff, known as partners, a bonus of 18 per cent of salary as it posted a 20 per cent rise in year profit after winning market share from rivals.

But the 147-year-old employee-owned group, which owns 28 department stores, four John Lewis "at home" stores, 244 Waitrose supermarkets and an Internet business, said it anticipated trading would get tougher.

"We expect trading conditions to be more difficult in 2011, as the VAT (sales tax) increase, rising unemployment, and public sector spending cuts begin to have an impact on consumer spending," said Chairman Charlie Mayfield.

"Input cost price inflation is also a continuing threat but we are not yet seeing the level of inflation in our prices that is widely quoted," he said.

Mayfield said the firm would invest £600m in 2011 and expected to create 4,300 new jobs.

John Lewis made a profit before the staff bonus and tax of £367.9m in the year to 29 January, helped by its strength among affluent consumers who coped better than lower income groups in the economic downturn.

That was up from £306.6m in the previous year.

After first-half profit rose 28 per cent the firm had a record Christmas, outperforming competitors.

The group, which is the only major British retailer to publish weekly sales figures, said total sales rose 10.6 per cent to £8.21bn.

The partnership bonus, equivalent to more than nine weeks pay, totalled £194.5m. Last year it paid out a 15 percent bonus.

Operating profit at John Lewis' department stores rose 22.2 per cent to £201.2m. At Waitrose it rose three per cent to 274.9 million pounds.

For the first five weeks of the new financial year like-for-like department store sales were up 0.5 per cent and up 5.1 per cent at Waitrose.