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The John Lewis Partnership has restored its staff bonus as a strong rebound in sales at both John Lewis and Waitrose boosted profits.

The group paid its 10,000 staff a bonus of £46m having previously put its bonus payments on hold until group performance improved.

The group’s profit before bonus, tax and exceptional items grew 38% to £181m year-on-year, which was £111m (159%) better than two years ago.

Including the bonus payment and exceptional items of £161m – related to the closure eight John Lewis stores, a customer delivery hub and its head office property exit in 2024 as well as property impairments – the group remained in a loss of £26m.

This was £491m (95%) better than its reported loss in 2020/21 when it wrote off a significant proportion of the value of John Lewis stores and £172m (118%) lower than the profit two years ago, when it had a one-off benefit from closing its defined benefit pension scheme.

Waitrose sales were £7.5bn, up 1% like-for-like on last year and down 1% on a reported basis. Like for like sales were up 11% like-for-like on two years ago (up 9% as reported).

Waitrose trading profit fell 11% to 1bn as margins were significantly diluted by inflationary pressures within supply chains, higher levels of absence due to Covid and higher fulfilment costs as a result of the increased levels of online trade.

John Lewis achieved the highest sales in its history, £4.9bn, which was up 8% like-for-like on last year (4% as reported) and up up 10% like-for-like (2% as reported).

Trading profit as John Lewis was up 37% to £758m as margin improved due to a combination of stronger sales, lower markdowns on sales and the mix of sales - with a higher proportion of Fashion and Home sales.

The group said reducing costs remains a key priority, with it cutting costs by £170m during the year.

Nonetheless, it said having achieved its target of pre-exceptional profits of at least £150m and a debt ratio of less than 4 times it decided to restore the staff bonus at 3% and additionally will pay a voluntary real living wage, which in addition to a 2% pay review, is a £54m investment in staff.

Looking forwards JLP said global events and inflation “creates uncertainty” but it remains committed to investing in growth, including investing £119m in John Lewis shops, digital services and our distribution capabilities and £55m investment to complete a further 23 major refurbishments of Waitrose stores and £72m investment in digital services and distribution.

It said it will work with Waitrose suppliers to keep prices as low as possible and offering savings on products that customers buy the most through the revamped MyWaitrose loyalty scheme.

Chairman Dame Sharon White commented: “This is a year of opportunity for the Partnership, despite economic headwinds. We have come through so much already and our solidarity will continue to carry us through. I am confident that by continuing to invest in our strategy we will deliver for our customers, partners, suppliers and communities.”

“As we head into the second year of the Partnership Plan, our five year strategy to transform the business, we’re gaining momentum in the most competitive retail market in history. Our focus on quality, value, sustainability and exceptional service is serving us well.”

Morning update

Baby boomer meals specialist Parsley Parsley Box is looking to raise £5.9m through a new share placing to boost growth.

The group will place shares at 20p per share, consisting of an open offer to raise £1.1m and £4.2m from company directors and associates.

The Issue Price represents a premium of approximately 11.1 per cent. to the closing share price on 9 March 2022. The Fundraising is not being underwritten.

The group will use the new funds to targeted new customer acquisition, product development for food and improve its online offer through a customer journey tailored to its demographic and a membership program to start a customer community.

It will also be used to strengthen the balance sheet and general working capital to support a four-year-old scale up business.

Packaging giant DS Smith has said it has been trading in line with management expectations since 1 November, with strong pricing growth offsetting cost increases.

It said its third quarter has seen continued momentum, with good progress in profitability and cash generation.

Volume growth and continuing packaging price increases have more than offset ongoing input cost increases with overall trading in line with its expectations.

It has continued to see good box volume growth driven by FMCG customers, despite very strong comparatives and some localised Omicron-driven absences.

It reported above average growth with larger customers and good momentum behind more sustainable packaging solutions.

Within Europe, the Eastern region has been its fastest growing, reflecting business mix and relative growth rates in the comparative period. It also saw continued strong growth in North America, driven by increased customer demand driving greater utilisation of its Indiana plant.

The group expects mid single-digit percentage like-for-like volume growth for the year to 30 April 2022.

However, input costs including energy and labour continued to increase, with prices remaining high, reflecting ongoing strong demand levels.

It said these costs being recovered through increased packaging pricing and it expects this to continue into the next financial year.

Its only involvement in the Ukraine/Russia situation is a minority investment in a Ukrainian business which serves customers predominantly in Ukraine with limited sales in Russia. Production in these operations is currently suspended.

CEO Miles Roberts commented: “Despite the increasing macro-economic and geo-political uncertainty, the outlook for the year remains unchanged by recent events with the second half of the year continuing to show good momentum. Our geographic footprint, secure supply chain and customer offering focussed on innovative sustainable packaging solutions remains compelling to our resilient customer base of FMCG multi-national companies and has driven continued good volume growth, despite the strong comparatives.

“We have successfully managed the inflationary cost pressures experienced in the market, and this, together with raising packaging prices and growing volumes, is driving the anticipated increased profitability and cash generation.”

“The structural growth trends for corrugated packaging are stronger than ever, and we have strategically positioned the business well to capture these drivers, underpinning our confidence in progress for the remainder of the period and into our next financial year.”

Finally, agricultural supplies group Wynnstay has agreed terms to acquire Humphrey Feeds Ltd, a manufacturer and supplier of poultry feed to farmers mainly in the South of England.

In addition, the company is acquiring the share capital of an associated business, Humphrey Pullets Ltd, which supplies point-of-lay pullets.

The initial consideration for these acquisitions is £9.5m in cash at completion.

In the year ended 28 February 2021, Humphrey generated combined revenues of £39.51m, and an adjusted profit before tax of £1.16m. Reported combined profit before tax was £1.63m.

On the markets this morning, the FTSE 100 is back down 1% to 7,116pts.

Risers include Parsley Box, up 21.1% on today’s announcement to 21.8p, McBride, up 5.7% to 49.7p, Wynnstay, up 4.9% on its acquisition and FeverTree, up 2.9% to 1,620p.

Fallers include McColl’s down 23.4% back to 1.78p, Hotel Chocolat, down 3.8% to 409p and Just Eat, down 3.1% to 2,430.5p.

Yesterday in the City

The FTSE 100 rebounded 3.3% yesterday, reversing some of the heavy falls at the end of last week.

Risers included McBride, up 8.1% to 47p, Naked Wines, up 6.6% to 381.5p, Coca-Cola Europacific Partners, up 6.3% to €42.45, Hotel Chocolat, up 4.9% to 425p, Greggs, up 4.4% to 2,303p, Nichols, up 3% to 1,360p and Premier foods, up 3% to 101.2p.

The day’s fallers included Parsley Box, down 23.4% back to 18p, McColl’s Retail Group, down 4.7% to 2.33p, Coca-Cola HBC, down 2.5% to 1560.5p and Science in Sport, down 1.8% to 54p.