Waitrose has seen its profits fall again in the past six months of 2015 as ‘turmoil’ in the grocery market and a loss of property profits hits the company.
In its six -month financial results released this morning, sales for Waitrose rose by just 1.1% compared to the year-ago period while like-for-likes were down 1.3%, with sales reaching £3.18bn. The John Lewis department stores fared better, seeing sales rise by 3.8% to £1.95bn.
But profits before tax and exceptional items – which includes the company’s bonus scheme and property contributions – fell £33.8m to £96m across the John Lewis Partnership.
Excluding the impact of property, operating profits were £0.8m (up 0.6%) in Waitrose but still down 16.3% for John Lewis to £9.2m.
Sir Charlie Mayfield, chairman of the John Lewis Partnership, said the drop in profits before tax and exceptionals was “predominantly driven by higher pension charges arising from volatility in the market-driven assumptions and last year’s property profits”.
Mayfield said that when these were excluded, at a trading level the Partnership’s profits were “broadly level with last year”. He added that this came “despite the turmoil in the grocery market”.
Waitrose has a 5.1% grocery market share [Kantar Worldpanel 12 w/e 16 August 2015], a 0.2 percentage point increase on August last year.
Waitrose had seemed resilient to the woes hitting the big four in recent years, but in 2014 – despite a rise in sales – the company issued a profit warning.
The upmarket retailer is suffering from a series of issues blighting the entire industry, including easing inflation, customers wasting less food, and more people eating out – but predominately profits have in the past year been hit by increased pricing competition across the sector.
In an attempt to keep up with this competition, Waitrose launched the ‘pick your own’ scheme in June, which allows myWaitrose card customers to choose ten items from across 1,250 products that they can buy at a 20% discount.
Mayfield said that more than 700,000 customers had signed up to this scheme, but Waitrose bosses warned in the summer that it could prove “very expensive”.
The company said in its results today however that PYO has helped create an 18% increase in the number of active myWaitrose card holders, and noted a continued growth in overall customer numbers, up 7% in Waitrose and 6% in John Lewis.
In the past six months there have also been five new Waitrose branches and a new online distribution centre in Coulsdon.
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