John Lewis plans online deliveries in 27 countries
Thursday 10 March 2011
John Lewis is looking to extend its online home-delivery service to 27 countries, including the US and Australia, by August, the group behind the department-store chain said yesterday as it delivered a 20 per cent jump in pre-tax profits.
The performance enabled John Lewis Partnership (JLP), which also owns the grocer Waitrose, to pay its 76,500 employees a bonus of 18 per cent of annual salary – equal to more than nine weeks' pay – from a total pot of £194.5m. The group pays all employees, from the chairman to sales assistants, the same percentage bonus.
Despite both chains powering ahead last year, JLP's chairman, Charlie Mayfield, struck a cautious note on consumer spending, but was hopeful it would improve from the spring.
However, the group is still forecasting growth this year after its profits surged by 20 per cent to £367.9m for the 12 months to 29 January. To drive forward both businesses, JLP is increasing its capital expenditure by nearly a quarter to £600m. This will see it invest in new shops, services and its systems, creating 4,300 new jobs.
Of the £233m investment at John Lewis, one of the department store's most eye-catching initiatives is to deliver goods ordered online to 11 European countries, including Ireland, France and Germany, from June.
Two months later, the department store will target a further 16 countries, including Singapore, the US, New Zealand and Australia. John Lewis confirmed it will target the cities of New York, Sydney and Auckland – which all have big expatriate communities. Andy Street, the managing director of John Lewis, said: "This is about us being confident there will be real demand from the expat market." He said it had no plans to open stores in these countries.
A strong uplift in online sales last year helped John Lewis to deliver a 22.2 per cent leap in operating profits to £201.2m and like-for-like sales up 10 per cent. Of the department store's total sales of £3.23bn, online, including click and collect in store, accounted for £538.2m, or 17 per cent. However, John Lewis has seen far more subdued trading since the end of January and Mr Street said it was forecasting growth of just 1 per cent, excluding online and new space, at its "established stores" this year, compared with 6 per cent in 2010/11.
Waitrose was also a star performer last year, growing its operating profit by 3 per cent to £274.9m, which would have been up to £4m higher without the heavy snow in December. The 244-store grocer grew sales by 9.8 per cent to £4.97bn over the year, boosted by 20 new stores and three relocations of shops. Mark Price, the managing director of Waitrose, struck a bullish note on this year and forecast like-for-like sales growth of up to 5 per cent, compared with the actual 4 per cent last year. He also said that Waitrose's food inflation was only 2.7 per cent currently, a sharp contrast with the 4.5 per cent figure the British Retail Consortium unveiled on Wednesday.
On the outlook for consumer spending, Mr Mayfield said that "confidence is fragile" but was hopeful consumer spending would strengthen after Easter and return to "slow growth" later in the year. He said: "It is a bit like the country is waiting for its exam results and when they come through, people will be able to look towards the future."
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