Waitrose has suffered a drop in half-year operating profits of almost 14%, despite food sales growing impressively on a like-for-like basis.
Profits for the past six months fell by £17.6m to £110.2m, Waitrose announced today. The performance follows heavy investment on its stores and squeezed margins on some lines as the supermarket upped its focus on value.
Capital expenditure was up from £48m for the equivalent period last year to £150m, as Waitrose opened 16 new shops compared to nine in 2010. It pumped £15m into the refurbishment of its Canary Wharf store alone, while a ‘dark store’ is also due to open next month in Acton to support the growth of its online business following the end of its no-compete deal with Ocado in London.
Profits also came under pressure from a heightened focus on value, with Waitrose saying it had absorbed “the majority of inflation” rather than passing on increased cost to shoppers.
However, like-for-like food sales were up 4%, with total sales for the six months to 30 July up almost 9% to £2.63bn.
“We are not simply waiting for the recovery,” said Charlie Mayfield, chairman of the John Lewis Partnership, which runs the supermarket. “We have increased the pace of investment and innovation across the partnership, putting us in the best possible position to seize the opportunities created by the structural shifts in how consumers are shopping.”
Meanwhile, Waitrose yesterday revealed plans to run two Little Waitrose convenience stores at Shell forecourts in Watford and Kensington Gardens.
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