Waitrose has reaffirmed its commitment to continue matching Tesco on branded goods in 2015 despite its profits plunging by almost a quarter in the previous year.

CEO Mark Price said there wasn’t a case for the upmarket supermarket to charge more for Heinz Beanz or Coca-Cola than Tesco or the rest of the market did.

Last month, The Grocer revealed Waitrose had not lived up to its promise on more than one third of the price cuts introduced by Tesco at the start of the year. The supermarket said doing so would break GSCOP rules and its commitment not to sell alcohol.

Price again denied Waitrose was hiding behind the grocery code to protect its profit margin. “We price match Tesco on brands excluding promotions and that is because we run 2,000 promotions if we said we weren’t going to run promotions and just match Tesco, our customers wouldn’t get as good value,” he said.

Trimming back the range to eliminate some of the lines Tesco has discounted the deepest was also not on the agenda, Price added. “No we won’t trim lines. Part of our attraction is we offer our customers a wide assortment and when they come to the store we want them to have the widest possible choice.”

Operating profit at Waitrose fell 24.4% to £237.4m in the year to 31 January despite it gaining customers, volumes and market share and growing gross sales 4.6% to £6.51bn – with like-for-like growth of 1.4%. The fall in earnings also dragged down pre-tax profit at the John Lewis Partnership, of which it is part, to £342.7m (down 10.5%) and led to a fall in the annual staff bonus to 11%, or £156m shared between 94,000 staff – down from 15% in 2013 and 17% the year before.

Price added the competitive environment and deflationary pressures was the “biggest challenge” he’d faced in his 34 years with the partnership. Profits also fell as a result of investment in IT, new stores and technology.

The impact of being forced to dramatically reduce the prices of core products such as milk (down 28%), bread (17%) and butter (28%) ate up between £35m and £45m worth of profits, he said.

“What you seeing now is a structural change in the way people shop and also a response to deflationary pressures and it is that which makes it’s so difficult for everybody and it won’t be resolved this year.

“Customers are changing the way they shop and the supermarkets have got to respond to those changes and work through how they do that in a profitable way. That change will take the best part of a decade to be resolved.”

The new financial year has got off to a tough start for Waitrose with like-for-like sales, excluding petrol, down 2.8% in the first five weeks. Partnership chairman Sir Charlie Mayfield said: “We expect the returns for the grocery sector to be materially lower for a period of time.”

Waitrose also laid out its commitment to the Ocado partnership with Price saying the supermarket had no intention of changing its relationship or initiating the upcoming break clause in the contract. “We’re very happy with the service we get from Ocado,” Price added.

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