A successful year for the John Lewis Partnership which saw gross sales total £8.21 billion also led to a 20 per cent rise in profit, it was revealed today.
In the full-year period to January 29th 2010, group operating profit increased 10.6 per cent to £431 million, meaning the partnership bonus for this year is 18 per cent of salary for each employee.
Department stores were the real winners of the year and saw operating profit increase 22.2 per cent, whilst the group’s grocery arm Waitrose boosted operating profit by three per cent.
Charlie Mayfield, Chairman of John Lewis Partnership, commented: “The partnership has achieved market-beating sales growth and a healthy increase in profits.
“I’m delighted that today we’ve announced that partners will receive a bonus of 18 per cent, an average of more than nine weeks’ pay. In addition we have paid £267 million into our pension fund in the last year.
“We continue to offer a non-contributory final salary pension to partners with more than three years service and our main pension fund has moved into surplus on a funding basis.”
Three John Lewis at home stores and 20 new Waitrose outlets were opened during the year, 4,100 new jobs were created and in 2011 it expects to increase its employee numbers by another 4,300.
A one-off cash contribution of £150 million was added to the partnership’s final-salary pension scheme in March last year and around £90 million has been invested in benefits for partners.
Maureen Hinton, Practice Leader at Verdict Research, commented: “John Lewis traded strongly in 2010 in both its department stores and supermarkets.
“Ensuring customers could buy at the same prices as competitors, particularly when doing their regular food shop, has meant that John Lewis and Waitrose retained the loyalty of their existing customers and won shoppers from rivals, outperforming many other UK retailers.
“This has made margin gains more difficult to achieve, but the partners are deservedly sharing in the increased profit.”
Looking forward, the partnership is due to open a new department store at Stratford in the east of London this year and plans to spend a further £600 million on its investment programme.
Sales growth has been slower so far this year compared to last, with gross sales up 6.5 per cent year-on-year after the first five weeks but department stores trade is up only 0.5 per cent like-for-like (LFL).
Mayfield said that the market is clearly tough at present but sees improvements in the general economy which make him confident in the group’s plans.
Nick Bubb, Retail Analyst at Arden Partners, added: “As for 2011/2012, things have started slowly for the department stores and with tough LFL sales comparatives Managing Director Andy Street is bound to be cautious about the trading outlook.
“But Waitrose Managing Director Mark Price may be more ebullient, given the scale of its current expansion programme.”