JLP half-year profit takes a dive

John Lewis Partnership saw sales rise but pre-tax profit slump in its half year to July 30 2011, the retailer said today – and operating profit at the department stores nosedived.
At the combined John Lewis and Waitrose business, gross sales were up 6.4% to £4.05bn, but pre-tax profit fell 18.2% to £90.4m.

Operating profit dropped 23.2% to £111.5m, with operating margin 2.75% as against 3.81% in 2010/11.

At John Lewis, gross sales rose 2.5% to £1.42bn, although like-for-like sales were up just 1.0%, and operating profit took at 54.5% hit – down to £15.8m. The company said profits had been “impacted by our commitment to ‘Never Knowingly Undersold’ as well as a highly-competitive trading environment”.

Waitrose’s performance was better, delivering gross sales of £2.63bn, up 8.7%, and a rise in like-for-likes of 4.0%. Operating profit was £110.2m, down 13.8%.

JLP said sales in both Waitrose and John Lewis grew well ahead of their respective markets, with Waitrose having been the fastest-growing supermarket for over two years now, and John Lewis gaining market share in its three key areas of electrical and home technology, fashion and home.

Home sales grew by 0.6% during the period, fashion by 4.2% and electricals and home technology by 3.8%.

The company said that its multichannel and online operations lay at the heart of John Lewis’ performance, with johnlewis.com outperforming its market and seeing 27.2% growth.

Johnlewis.com now accounts for 19% of total John Lewis sales, and the company reiterated its belief that there is still considerable opportunity for growth in the online operation. It expects johnlewis.com to be achieving sales of £1bn by 2014.

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