Page 8


Business review

Review of performance (continued)

Key performance indicators (KPIs)

Across the Partnership we focus on a number of KPIs in order to identify trends in the trading performance of both Waitrose and John Lewis. These KPIs are designed to help us understand how we are using our assets and where we are achieving efficiencies with the Partnership.


John Lewis Waitrose Group John Lewis Waitrose Group
2010 2010 2010 2009 2009 2009

Trading performance:
Gross sales growth – total continuing operations 2.8% 9.0% 6.5% (0.1%) 5.2% 3.0%
Gross sales growth – like for like(1) 2.3% 3.6% 3.1% (3.4%) 0.4% (1.2%)
Operating margin(2) 5.7% 5.9% 5.2% 5.1% 5.1% 4.6%
Gross sales per selling FTE (£000s) 163.3 222.5 157.6 211.5
Operating profit per FTE (£000s)(2) 7.8 11.4 8.5 6.9 9.4 7.2
Number of stores(3) 29 223 27 197
Average selling space (m sq ft)(4) 3.9 4.2 8.1 3.7 3.9 7.6
Gross sales per selling sq ft 740 1,066 910 766 1,051 914
Operating profit per selling sq ft(2) 43 63 48 40 54 42

Cash flow and liquidity:
Operating cash flow before Partnership bonus (£m) 647.6 586.1
Capital expenditure (£m)(5) 111.8 303.5 445.1 140.1 233.9 404.2
Interest cover(6) 5.4 5.6

Balance sheet:
Net assets (£m) 1,704.5 1,722.8
Net debt (£m)(7) 402.4 432.4
Gearing(7) 23.6% 25.1%
Return on invested capital(8) 7.7% 6.8%

(1) Like-for-like sales exclude the impact of branch openings and closures, and are on a 52 week basis.
(2) Operating profit has been restated in respect of the change in allocation of the financing element of long service leave costs and excludes profits from the disposal of surplus property. Margin is expressed as a % of gross sales.
(3) The number of stores trading as at the year end date.
(4) Average selling space (of all stores and branches) includes all customer facing areas and excludes offices, warehouse space and staff facilities.
(5) Capital expenditure for the group includes £29.8m (2009: £30.2m) of spending on group-wide information technology systems, vehicles, offices and other assets, not allocated to the operating businesses.
(6) Interest cover is profit before net finance costs, net gain in respect of associate and tax, after Partnership bonus, divided by net finance costs excluding net pension finance costs, net long service leave finance costs and fair value adjustments.
(7) Gearing is net debt divided by net assets.
(8) Return on invested capital is post tax profit, adjusted for non-operating items, as a proportion of average operating net assets, adjusted to reflect a deemed capital value for property lease rentals.