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John Lewis Partnership profits rocket 59.8%

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Department store group John Lewis Partnership has seen profits rocket 59.8 per cent in its first half to £144.5 million, according to financial results released today.

Group revenue jumped 8.6 per cent to £3.9 billion in the half year ending July 28th 2012 while gross sales reached £4.4 billion, up 8.7 per cent on the same period last year.

At the department store, revenue rose 12.9 per cent over the period to £1.3 billion with gross sales increasing 12.8 per cent to £1.6 billion.

Like-for-like (LFL) sales were up 9.2 per cent on last year as the retailer made “significant market share gains in each of three main categories” while also rolling out its click & collect offer across all John Lewis and Waitrose stores as it continues to strengthen its multichannel strategy.

Click & collect, which allows customers to pick up goods purchased online in store before 7pm the same day, has proven wildly popular since its launch and has grown by 114 per cent while purchases collected from Waitrose outlets account for 34 per cent of sales.

Johnlewis.com provided a significant boost to overall results as online sales leapt by over 40 per cent, now accounting for nearly a quarter of total John Lewis sales.

Charlie Mayfield, Chairman of the John Lewis Partnership, commented on the results, saying: “Our multichannel operation continues to go from strength-to-strength, with customers appreciating the ease of shopping across a variety of channels from smartphones to in-store internet kiosks.

“We made significant market share gains in each of our three main categories. Sales in EHT were ahead by 31.8 per cent, Home increased by 6.2 per cent and Fashion saw good growth of 7.2 per cent.

“A series of events, including the Diamond Jubilee, helped drive sales, with John Lewis’ role as the ‘Official Department Store of the London 2012 Olympic and Paralympic Games’ having a positive impact in the run up to the Games.”

Market share gain was driven by the retailer’s ‘Never Knowingly Undersold’ campaign, he added, while noting that brand partnerships with the likes of Apple, which yesterday unveiled its highly-anticipated iPhone 5, also contributed to an increase.

Expansion of its burgeoning store portfolio continues to be a primary focus for the department store, which opened two new ‘At Home’ branches over the half in Newbury and Chichester as well as its first ever pop-up in Exeter ahead of the opening of a flexible format store in the area next month.

Meanwhile Waitrose, which Kantar Worldpanel announced this week had held onto its all-time record share of 4.6 per cent, saw gross sales rise 6.6 per cent to £2.8 billion.

LFL sales rose 2.2 per cent as operating profit reached £142 million, an increase of 28.9 per cent over the period.

Extending its Brand Price Match in May this year has boosted sales at the upmarket grocer as it seeks to compete with rivals in an increasingly promotions-driven market.

Prices on branded grocery products now match Tesco’s, while the supermarket has sought to increase product innovation, with 2,700 new and improved products launched in H1 and a further 2,200 planned in the second half.

Waitrose.com also benefitted from greater investment as online sales soared 50 per cent on the same period in 2011, making it the fastest growing major UK online grocer, according to Kantar.

Continuing to extend its bricks & mortar offering, the retailer opened four new supermarkets and six convenience branches under the Little Waitrose fascias over the half, bringing its total to 382 shops.

Mayfield explained that the group’s strong results were thanks to a wide-reaching strategy aimed at improving service and broadening its offering.

He said: “Three key factors lie behind these excellent results.

“Firstly, we benefited from the more favourable conditions created by a number of one-off events, such as the Diamond Jubilee, the lead up to the London 2012 Olympic and Paralympic Games and the anniversary of the VAT increase which depressed sales last year.

“Secondly, our trading teams performed particularly well, with clearly differentiated products backed by outstanding service. In Waitrose we launched more products than ever before and extended the Brand Price Match.

“In John Lewis we took market share in all categories and launched a series of innovative design collaborations.

“And thirdly, we saw an acceleration in sales and profit from the longstanding focus we have had on developing our multi-channel operations and from improving the efficiency of our business.

“Multichannel sales made a vital contribution across both John Lewis and Waitrose and we extended the reach and appeal of our offer with the extension of Click & collect to most Waitrose shops.

“We also saw the benefits of changes made in the branch operations in both Waitrose and John Lewis, and an increasing contribution to greater efficiency from our Partnership Services division.”

Published on Thursday 13 September by Editorial Assistant

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