Group profits dented by miscalculated holiday pay costs and redundancy payments despite rise in John Lewis and Waitrose sales
The group, which owns 39 department stores and the Waitrose supermarket chain, said sales rose 7.3% to more than £4.7bn in the six months to July as it won market share from rivals in fashion, homewares and electricals as well as groceries. Waitrose sales rose 7.8% while John Lewis department store sales climbed 6.6% despite the tough economic climate.
The partnership had to pay out £40m to employees after the group discovered it had miscalculated holiday pay over several years. It also faced a £15m charge, mostly related to job cuts among department store managers. Those two items wiped 38.5% off half-year profits to £68.5m.
The chairman, Charlie Mayfield, said the partnership had no plans for further job cuts “on that scale,” but there could be no guarantee against further restructuring as growth online outstrips high street performance. He expected to keep up the strong pace in the second half of the year as both businesses benefit from a link-up in which John Lewis goods ordered online can be picked up at Waitrose stores.
The retailer says 2013 will be the first “mobile Christmas” as shoppers use their phones and tablet computers to order an increasing amount of goods via the internet. More than 40% of John Lewis’s online sales now come via handheld devices and Mayfield says this is likely to increase in the next few months. His hopes for a strong Christmas have been boosted by better signs on the economy but he cautioned: “My view is the recovery will be long and not in a straight line.”
While the department stores continue to see like-for-like growth, Mayfield said two-thirds of customers now shopped via both the stores and the internet, where sales rose 17%.
Waitrose sales online rose 41% during the half year and it is to open a second “dark store” to handle demand for home deliveries in London. It is scheduled to open by the second half of next year. Waitrose continues to open more stores with long-term plans to have as many as 600 stores around the country, compared with 300 at present.
The grocer said it was encouraging shoppers by signing up 2.5 million to its myWaitrose loyalty scheme, which had helped encourage more return visits. Mayfield said the department stores were now looking at introducing a loyalty programme as a result.