John Lewis staff share £106m bonus

Waitrose's expansion in northern England put the supermarket chain neck and neck with the department store John Lewis last year, the partnership revealed yesterday as it shared out a £106m bonus among its staff.

Waitrose's expansion in northern England put the supermarket chain neck and neck with the department store John Lewis last year, the partnership revealed yesterday as it shared out a £106m bonus among its staff.

Waitrose, which acquired 19 ex-Safeway stores from Wm Morrison, matched John Lewis's £121m net profit in the year to 29 January. A 3 per cent rise in underlying sales at both divisions drove the profit advance.

However, as the group announced a 24 per cent rise in pre-tax profits to £216m, Sir Stuart Hampson, its chairman, echoed rival retailers in striking a sombre note about the sector's prospects in 2005. "It promises to be a challenging year. We are very aware of particular difficulties in non food," he warned.

During the first five weeks of its financial year, underlying sales across its 26 department stores have dropped 1 per cent, while climbing 5 per cent at its 166 supermarket sites. The British Retail Consortium confirmed that February had been a tough month for retailers.

John Lewis yesterday said it would pay out £106m to its 63,000 partners. The bonus is worth seven weeks' pay and is 14 per cent more than staff received the previous year. The ex-Safeway staff who joined Waitrose last summer will receive a bonus equivalent to around three-and-a-half weeks' pay, depending on how long they have been employed by the John Lewis Partnership.

Waitrose's sales exceeded those of John Lewis, rising 10 per cent in total to £3bn, while the department store division's sales rose 1 per cent to £2.4bn. Total partnership sales rose 6 per cent to £5.3bn. At a trading level, which excludes property gains and exceptional items, the department stores remained the bigger profit contributor, delivering an 8 per cent increase to £212m, against Waitrose's 10 per cent gain to £193m.

Charlie Mayfield, who replaced Luke Mayhew as managing director of John Lewis after his predecessor's decision to leave, reiterated his ambition of increasing the division's trading space by 50 per cent by 2010. The group's first new department store in four years will open in May in Trafford.

The group is ditching its long-standing Jonelle brand, as it re-launches its own brand under the John Lewis banner. It is aiming to double the sales it gets from own brand goods to around 40 per cent over the next few years, Mr Mayfield said.

Steven Esom, who runs Waitrose, set the group the target of opening up to 50 new stores within the next few years. He predicted the group, which has prospered from the woes of J Sainsbury and Marks & Spencer, would continue to steal market share from its competitors.