Waitrose pre-tax profits slumped another 17.4% last year as the supermarket slugged it out in a brutal price war with the big four and the discounters amid a deflationary market, newly filed accounts have revealed.
A Waitrose spokeswoman blamed the fall on rising pension costs at the John Lewis Partnership and stressed it was not a reflection on the trading performance.
The partnership bonus of £80.1m shared between the close to 60,000 staff left pre-tax profits at £66.6m, compared with £80.6m in the previous year when a bonus of £87m was paid.
Revenues in the 52 weeks to 30 January 2016 for Waitrose Ltd, which does not include five stores in the Channel Islands, slipped £50m to £6.02bn as the grocer struggled with food price deflation of about 2.6%. Waitrose also blamed cut-throat competition in the fresh aisles for a fall in sales in the run-up to Christmas, with like-for-like figures down 1.4% in the six weeks to 2 January.
As The Grocer reported in March, when John Lewis Partnership publishes its results, like-for-likes sales at Waitrose were down 1.3% last year, but gross sales increased 1.1% to £6.46bn when stripping out the extra week of trading in the 53 weeks to 30 January 2015. Waitrose also said at the time that operating profits actually increased 3.9% on a 52-week basis once profits it made on a property deal in the previous year were excluded.
But the accounts filed yesterday at Companies House showed operating profits after exceptional items in 2015/16 fell 18% from £168.6m to £138.2m as operating expenses climbed £35m to £1.7bn.
Pre-tax profits at the supermarket have been in decline since 2009/10 when the bottom line came in at £154m.
“[The pre-exceptional] profit improvement came against a backdrop of exceptionally tough market conditions and continuing food price deflation, as a result of improved productivity in our branches, reduced head office costs and operational improvements in our supply chain,” Waitrose said in the business review of the accounts.
It also highlighted a continued increase in market share, with Waitrose hitting a record figure of 5.3% in the 12 weeks to 22 May.
“Conditions in the market will remain difficult. However, given our continued investment in our operation, sales are expected to continue comparatively well against the market.”
A statement from Waitrose to The Grocer about the Companies House accounts said: “The accounts lodged with Companies House don’t adjust for the fact that we are comparing a 52 week trading year with a 53 trading weeks the previous year. When adjusted to compare 52 weeks against 52 weeks - which is more meaningful - sales were up 1.1 per cent.”