John Lewis tipped to post £350m profit and increase staff bonus
Market waits for updates on retailer's expansion plans and on Morrisons chief's new strategy
Sunday 06 March 2011
In a big week for retail, the focus is on John Lewis Partnership's bonus payout to its staff and its plan to open new stores.
Also this week, Dalton Philips, the chief executive of the supermarket chain Morrisons, will reveal an update on his new strategy and details of an expected share buyback of up to £1bn.
John Lewis's pre-tax profit for 2010 is expected to come in nearly £30m shy of its 2008 record of £379.8m. Nick Bubb, a retail analyst at Arden Partners, has forecast a 15 per cent increase on last year, with £352m expected for the 12 months to the end of January. And experts have suggested its annual bonus payment could exceed last year's 15 per cent of partners salary.
John Lewis, despite having a tougher late January and February this year, is still keen to expand its shops across Britain. It is in talks to open another two "at home" stores, its homewares to electricals concept. These are in Tamworth, Staffordshire and Chelmsford, Essex. Later this year it will open in Chester and Exeter and is also planning a store in Newbury. Cushman & Wakefield and Ashworth Chartered Surveyors are advising John Lewis.
A John Lewis spokeswoman said: "Our customers have responded well to the convenience provided by John Lewis at home. We see scope to grow the number of shops significantly over the next four to five years."
It is thought the retailer has eight stores in the pipeline. The "at home" concept was planned to compensate for delays in opening large department stores as the recession forced retail developments to be put on hold.
However, John Lewis confirmed last month that it plans to open a 250,000 sq ft full-line department store in Birmingham's city centre in 2014.
A new John Lewis department store and Waitrose will open in Stratford, east London, later this year. It has also been busy filling in vacant space – freed up by improved storage systems – with spas and foodhalls.
Meanwhile, Bradford-based supermarket chain Morrisons will give a progress report on the business plan which Mr Phillips hinted at in September's interim results. Analysts predict it will report a pre-tax profit of £867m for the year.
Morrisons is widely viewed as being behind its competitors on many fronts and has recently embarked on plans for convenience stores, a trial of better use of space and an online presence in both food and non-food markets. It will confirm plans for three convenience stores in the M62 corridor close to its head office
Justin Scarborough, an analyst at its house broker, RBS, said: "Dalton has enthusiasm, drive and hunger and has demonstrated he has lots of good ideas. Next week will be a progress report. It is far too early to tell what capital costs it will need to fund its proposed expansion as it will not be able to update with exact detail. Many of his plans are still at the trial stage."
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