Nearly 85,000 staff at the group behind the John Lewis and Waitrose chains celebrated a bumper bonus of 17 per cent today after barnstorming Christmas trading delivered record profits.
John Lewis Partnership’s eponymous department store chain was the High Street’s top performer over the festive period after its snowman TV advert helped to tap the purse strings of Middle England’s shoppers. While the stand-out performance was John Lewis online with sales of nearly £1bn, the retailer’s stores also delivered scorching sales of Apple’s iPad, Liz Earle beauty products and Lego mini figures.
Its stablemate Waitrose chain also posted strong sales after an initiative to match the price on at least 1,000 branded products, excluding promotions, at Tesco helped it further shed its ‘posh and pricey’ image.
JLP’s 84,700 employees were awarded a bonus of 17 per cent of their salary yesterday – equal to nearly nine weeks’ pay – from pot of £210.8m. This was up on last year’s payout of 14 per cent.
The group’s powerful performance came in a year when scores of High Street names, including electricals chain Comet, sportswear specialist JJB and camera retailer Jessops, disappeared. It also contrasts with a recent fall in half-year profits at rival Marks & Spencer, which has been struggling to shift its fashion and homewares.
JLP delivered record profits, excluding the staff bonus, up by 15.8 per cent to £409.6m over the year to January 26, on revenues higher by 9.3 per cent to £9.54 billion. This beat the group’s previous record profits of £407m in 2008, which had been inflated by a credit on the balance sheet from its former stake in online grocer Ocado.
Charlie Mayfield, JLP’s chairman, said: “Retail is no longer a commodity game. The people who succeed are the ones who really add value.”
He added the performance of John Lewis had “not particularly” been affected by January’s snow, which rival Debenhams had blamed for a profit warning this week.
Mayfield said: “I firmly believe you have to create your own luck in retail.”
John Lewis has benefited from the recent demise of Comet, Jessops and entertainment chain HMV - as consumers have sought the reassurance of its Never Knowingly Undersold price promise and warranty guarantee - with its electricals sales up by 29 per cent.
Profits at John Lewis, which has 39 shops, rose by 37.2 per cent to £216.7m. The department store chain’s total sales rose by 13.5 per cent to £3.78bn, driven by a 41 per cent spike in online revenues to £959m.
Mr Mayfield hailed the “quiet revolution” of its significant investment in the group’s supply chain and IT, citing how new systems had improved Waitrose’s product availability.
The supermarket chain grew its underlying sales by 3.4 per cent over the year, which was significantly ahead of rivals, Sainsbury’s, Tesco, Asda and Morrisons.
This helped the grocer grow its profits by 12.2 per cent to £292.3m, on revenues up by 6.8 per cent to £5.42bn.
Mr Mayfield struck a cautious but optimistic note on consumer spending. “I think it is stabilising and perhaps showing signs of improvement. We do see this as a time of opportunity for us and we are determined to seize it.”
He added: “But it is not going to be plain sailing. Some of the shocks we have had to cope with over the last five years have eased. This time a year ago there were some concerns that the Euro would implode but that has not happened so it does feel more stable. We will continue to see a fairly slow-growth economy for some time to come.“