Morning:
13°c
Waitrose showed today that it is fending off the challenge posed by the discount supermarkets and that it has thrived despite the recession.
When the economic downturn began, some analysts feared the stores would prove too posh to prosper and that cheap rivals such as Lidl and Aldi would grab its share of the market.
Today the grocer owned by the John Lewis Partnership (JLP) said sales in the half-year to August jumped by 7.4% to £2.2 billion. Even like-for-like sales, which strip out the effect of expanded store space, rose 1.8%. Those took profits to £121 million, a rise of 19%.
John Lewis chairman Charlie Mayfield was delighted. “It is a really strong bounceback from Waitrose. We launched the essentials' range which cut prices but kept the same quality and customers have loved it,” he said.
The wider John Lewis group can also claim to have prospered during the downturn, grabbing market share in both fashion and electronics. However, the home furnishings arm has been bitten by the lack of activity in the housing market, said Mayfield.
“This time last year conditions were horrible. But we prepared well for the recession. We nailed everything down very tightly and things have not turned out as bad as we first feared,” he added.
Sales across the JLP rose 3.5% to £3.4 billion.
Profit before tax tumbled 20% to £86 million, which suggests the partners — all staff — might see a lower bonus payment this year.
The bonus pool is announced with full-year results in six months' time. Typically, John Lewis pays out half of its profits, with all staff getting the same percentage of their salary in bonus — last year it was 13%.
John Lewis has nearly 70,000 employees.
The firm was founded in 1864 and has since grown into the third-largest private company in the UK. Its unusual corporate structure is seen by some as a direct challenge to the orthodoxy that shareholder-owned companies are most likely to succeed.
Mayfield said: “Our structure means that we can continue to invest through a downturn. Some other businesses have had cash flow issues, we have not. We are a long-term business; we rely on our people.”
John Lewis has long been regarded as a barometer of the state of British retailing thanks to its appeal to a core of middle class shoppers.
Despite the encouraging figures, the company is still cautious about the immediate future.
“We believe that trading conditions this year will continue to be better than expected. However, 2010 may be difficult and we foresee a slow, drawn out economic recovery,” said Mayfield. Waitrose has just done a deal with Prince Charles's Duchy Originals brand that it expects will “strengthen our premium offer”.
John Lewis has been one of the most successul retailers of the last few years. Its turnover has soared from less than £4 billion in 1999 to £7 billion in 2008.
It made £280 million profit last year, a number it would seem likely to fall short of this time. But the second half of the year, including the Christmas period, is always busier than the first.
Reader views (5)
I totally agree with all the above and would like to add that customers are not stupid, we know quality when we see it. Merchandise and produce may be slightly more expensive than some of the other high street supermarkets but one would rather pay a little extra and know that the quality will be excellent. I have been shopping in John Lewis and M&S for 30 years and both stores have rarely let me down. However, in recent times M&S's clothing has lost the quality it used to be renouned for. I feel they are trying to compete with the likes of Primark which to my mind is cheap rubbish. In times of hard ship people don't need to keep throwing what little money they have down the drain. I would rather pay £25 for a plain white T shirt of higher quality than £10 and have it lose its shape after a couple of washes. Anyone else agree?
- Ashley Smithson, st albans
John Lewis deserve to be at the top - their customer service is second to none, their staff are always helpful and very well trained - and their prices competative.
- Natalie Gilbert, Finchely, London
The group deserve to do well,the stores are always spotless,the products very well presented,the staff are very well trained and smartly dressed and are very well looked after.They do not work for the company they are a part of the company and their job satisfaction reflects the customer satisfaction.
The actual fresh products they sell are the finest and you do not have to turn over products to find a nice one,thats a good sign that the buyers know what they are doing.Thats why i shop there.
- Ray, london
The main reason the John Lewis group do well is customer service. They treat their staff better than their competitors and the staff in turn treat the customers better. They also do well because of their better quality. Waitrose may be slightly dearer but the quality is often far superior. Long may they continue!
- Michael, London
Waitrose has always been one of the best. It's soooooo much better than that other one. You know the one..."every little 'elps". Waitrose, Sainsurys and M & S are the only ones I use. I can understand why people want to use other places like Asda, Lidl and Aldi but not, definitely NOT The Big T... It's a vile place and totally hellbent on taking over the whole of the UK.
- Jb Sussex, hove sussex uk
