Profits slump 77% at John Lewis Partnership

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Waitrose gross sales of £6.75bn were 1.8% ahead of last time, or 0.9% on a like-for-like basis, while John Lewis gross sales of £4.84bn were 2.2% up on a year ago, or 0.4% LFL.

The owner of Waitrose and John Lewis department stores has emerged as the latest victim of hard conditions on the high street after it reported a massive plunge in annual profits and said that it would cut its staff bonus to five per cent of salary this year.

The company said 85,000 staff, known as partners because they jointly own the business, would receive a bonus equivalent to 5% of annual pay. Profit before partnership bonus and tax as a result fell by 67.2 to £177.9m.

He admitted that changes made across the group had affected "many" of its employees, with 1,400 redundancies in the past year.

"We said in January 2017 that we were preparing for tougher trading conditions with weakness in sterling feeding through into cost prices, putting pressure on margin, and much higher exceptional costs as a result of an acceleration of planned changes", partnership chairman Sir Charlie Mayfield said.

John Lewis Partnership has revealed diving profits in its full-year results as "intensifying margin pressure" at Waitrose drags down figures.

John Lewis Partnership chairman Charlie Mayfield on Thursday blamed falling disposable income, a lack of activity in the housing market and the negative impact of Brexit on consumer sentiment for Britons reining in their spending.

Waitrose saw like-for-like sales grow by 0.9% but at the expense of a 42% dive in operating profits, as higher costs were not passed on in prices.

Waitrose achieved gross sales of £6.75 billion past year, up 1.8% compared to 2016, with like-for-like sales, excluding fuel, increasing by 0.9%. Waitrose recorded 2.4% growth in like-for-like sales, excluding fuel, and John Lewis same store sales were down 3.4%.

Looking ahead, John Lewis Partnership says that it expects trading to be volatile in 2018/2019, with continuing economic uncertainty and increasing competition. Sales were significantly impacted, particularly in John Lewis, by the heavy snow last week.

Following a profit warning in January, Sir Mayfield said the business chose to reduce the proportion of profits paid as Partnership Bonus a year ago in a bid to absorb the impact of tougher trading conditions.

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