Waitrose gives concern at John Lewis Partnership

DIRECTORS of John Lewis Partnership have become increasingly concerned about Waitrose, its supermarkets chain, which faces an alarming rise in its capital investment bill this year in a bid to stem the fall in underlying sales and profits.

Stewart Hampson, JLP chairman, has warned that the adverse effect on profits must be 'taken on the chin', provoking fears of another cut in the staff bonus at Britain's biggest worker co-operative.

On Monday he told the JLP general council: 'Let us not duck the issue. Waitrose is suffering from the combined effects of sales eroded by burgeoning competition, illegal Sunday trading . . . and the weight of capital investment in scanning and new distribution chain improvements.'

His warning - that 'the short term carries the strain' - will be published to the group's 39,000 employees later this week. In March they were paid the smallest staff bonus for 33 years.

JLP has decided that, rather than pull in its horns, it must step up its investment in Waitrose. The grocery chain is seriously trailing its rivals in technology.

Just one of its 102 stores has scanning equipment at the checkout. Putting scanners in every store will cost pounds 20m over 21 2 years. It is also planning improvements to its distribution centres at Milton Keynes, Buckinghamshire, and Bracknell, Berkshire, and five new branches this year.

Waitrose, one of the top 10 British food retailers with sales of more than pounds 1.1bn, has seen a slump in its return on capital. Profits five years ago, when it had 25 fewer stores, were pounds 44.5m compared with pounds 41.7m in the year just ended. Stripping out the benefit of new stores, sales are 3.7 per cent below a year ago. It says it is losing pounds 1m of sales a week by staying closed on Sundays.

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