Private pleasures Its status as a private company may exclude it from equity funding, but there are benefits to Waitrose's independence. Financial advisor Brian Carroll talks to Gillian Law Working for a private company gives directors an ideal work environment, according to Waitrose financial adviser Brian Carroll. Although the company is limited in terms of raising cash compared with a listed company, that disadvantage is more than outweighed by the benefits of independence, he says. "You're not subject to predators; you can't be taken over," Carroll says. "The most positive aspect is that we can think long term, instead of dressing up what we do with one eye on its impact on the market." There is more than enough competitive pressure in the food retail environment to avoid the complacency a private company tends to develop, he says. Waitrose and the John Lewis department stores operate as separate companies, but both get overall approval for their revenue budgets and large capital projects from the John Lewis board. As financial adviser, Carroll is responsible for Waitrose budgeting, the financial appraisal of capital projects, strategic planning and forecasts. Although his principal focus is on Waitrose, the need for access to partnership capital means he has to "slightly face both ways". Carroll adds: "We have to justify our plans and I have a duty to be as objective as possible, not promoting a Waitrose case that I don't believe to be financially sound," he says. Sometimes, Carroll admits, it might seem easier to work in a listed company. "But there are two sides to that ­ those who live by the sword die by the sword," he says. "We've always got the capital we needed when we've explained our plans to the board. That may not always be the case, but if we present a financially sound case we get what we need." John Lewis borrows very little because of its unusual structure and expansion takes place at a rate that can be covered by cashflow. Waitrose expansion plans are therefore relatively low key. "We don't have specific ambitions to be all across the UK," says Carroll. "We certainly don't have ambitions to go outside the UK." Demographics are more important than location for Waitrose stores. "Our main concern is that we put shops where there are customers who appreciate our offer," he says. The 11 Somerfield stores that Waitrose bought this year are being converted and it will obviously be some time before Waitrose recoups its spending on them. "But that's no different from any other type of expansion," Carroll argues. This is the first time Waitrose has bought and converted a group of shops rather than building them individually from scratch. But Carroll says he was pleased by the reactions of customers and staff to the change. Waitrose also runs two Food and Home branches, one in Southend and one in Salisbury. Although these sell traditional department store products alongside food, they are totally Waitrose-run. Products and services are bought from the other division as they would be from any other supplier. "We're absolutely delighted with both of them," Carroll says. "They're establishing themselves very well." As one of the larger food retailers in the country, Waitrose was involved in the Competition Commission's recent inquiry and Carroll was the "lead person" dealing with its questions. "That has meant an awful lot of work, answering a massive number of questions," he says. "They've moved on now and we're not involved." The other drama for management across the Partnership, not just Waitrose, last year was a burst of speculation within John Lewis and in the press about a possible break-up of the trust, with rumours that partners would get about £100,000 each. Understandably, many were swayed by the promise of a big windfall, but the rumours were quickly scotched by chairman Sir Stuart Hampson. It's natural that people were attracted by the idea of a large "windfall" from the business, says Carroll, "but one generation of partners is really here as stewards for the next, not to reap the benefits of those who've gone before". It's not as though staff don't benefit from the structure as it is ­ annual bonuses of 20% of salary are not unusual. "As we don't have shareholders, that money can be distributed to those who produced the profits," Carroll says. "That's the whole concept." {{Z SUPPLEMENTS }}