John Lewis Partnership sees profit fall

John Lewis Partnership profit before tax before exceptional items was down 10.9 per cent to £305.5m in the year to 31 January 2016, but horticulture sales were not to blame.

Waitrose gross sales were down by 0.7 per cent to £6.46bn, with like-for-like sales down 1.3 per cent

John Lewis gross sales were up 2.8 per cent to £4.56bn, with 67 per cent shop sales against 33 per cent online.

Staff bonuses were 10 per cent, down from 17 per cent in 2013.

Waitrose recently said its horticulture sales are up

The supermarket chain, which has around 350 branches and 167 garden sales "pods", has an 8.2 per cent share of the grocery market in horticulture. For outdoor plants this rises to 18 per cent, according to analyst IRI. Waitrose's total grocery market share is 5.2 per cent.

Allensmore said in December that reserves for 2016 are equal if not more than 2015. 

A Waitrose representative said in December: "Horticulture is one of the strongest areas of our business and is seeing some of the most significant growth figures (sales are up 13.2 per cent year to date). Our customer insight shows that after cooking, gardening is our customers' favourite hobby - and we have plans to build on current success by growing our offer again next year."

Adam Pasco is new Waitrose garden magazine editor. Alan Titchmarsh has been Waitrose 'garden ambassador' since 2013. He has been involved in developing Waitrose Garden Magazine, which includes a detailed practical section called 'Alan Titchmarsh's Garden Know-how'.

The new magazine will be available in Waitrose stores from March 17.

JLP chairman Sir Charlie Mayfield said: "The Partnership has delivered a healthy trading performance and increased market shares in challenging conditions. Although Profit before tax and exceptionals was down by 10.9 per cent on last year, that was entirely due to higher pension charges arising from volatility in the market-driven assumptions, and lower property profits. Excluding these, our profits were around 7% up on last year which, together with a strengthening balance sheet, represents good progress over the year.

"Market conditions were challenging through the year with deflation in grocery of -2.6 per cent and subdued demand in non-food. Quality, value and product innovation were therefore all the more important alongside greater convenience and service. Our Partners performed well on all those fronts and did so while controlling costs tightly and increasing margin.

"As a result, Waitrose gained market share and grew profits. We attracted more customers while rewarding the loyalty of existing customers through hugely popular initiatives like myWaitrose, which now has six million members.

"In John Lewis we achieved sales growth and market share gains in Fashion, Home and Electricals and Home Technology and an increase in profits. Online sales growth was especially strong at 17 per cent, and although sales in shops were down one per cent, our results were very much a result of the effective combination of shops and online, demonstrated by the fact that more than three-quarters of our customers made a purchase from one of our shops.

"We also benefitted from the combination of John Lewis and Waitrose. Click & collect is the most obvious demonstration of that. It accounted for over half of all deliveries with 70 per cent of them collected in Waitrose.

"Gross sales after the first five weeks of the current year are up by 4.2 per cent against last year. In grocery, the market remains challenging, with Waitrose gross sales up 3.4% (0.4% like-for-like, excluding petrol). In John Lewis gross sales are 5.5% higher than last year (3.6% like-for-like).

Conditions in the market will remain difficult, especially in grocery. However, given our continued investment in both our operations and the customer offer, I expect sales in both Waitrose and John Lewis to continue to perform comparatively well against the market.'

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