Chairman’s statement

continued

Planned investment in our customer offer, in service and efficiency and in future growth, together with a highly competitive trading environment, combined to hold back profit delivery.

Trading Performance

Waitrose

Waitrose achieved another period of industry-leading sales growth and we have now outperformed the market for over two years. We were voted Which? Supermarket of the Year – fitting recognition of the commitment by 49,000 Partners to give customers the best possible service, products and shopping environment.

Gross sales were up 8.7% (£209.7m) to £2.63bn and food only like-for-like sales grew by 4.0%. Sales growth continued throughout the half, with like-for-like sales up 4.7% in Q1 and 3.4% in Q2. Operating profit reduced by £17.6m (13.8%) to £110.2m.

Compared to last year, 300,000 more customers shopped at Waitrose each week and market share increased by 0.2% to 4.1%.

Planned investment in our customer offer, in service and efficiency and in future growth held back profit delivery.

We pursued our multichannel strategy with the launch of a new technology platform in March and saw a 26.8% increase in sales. The service was renamed Waitrose.com and a nationwide marketing campaign highlighted the emphasis on high service standards from Waitrose Partners. The restriction on trading within the M25 came to an end and to support the expected high volumes in London we plan to open a fulfilment centre in Acton, West London, this autumn.

Our online service is complemented by convenience branches for fresh food topups, and Waitrose now has a total of 21 shops in this format. We plan to open a further 12 by the end of this year and intend that there should be more than 300 in our estate by the end of the decade.

At the end of July Waitrose had 259 shops, having opened eight supermarkets in the past six months, including the five acquired in the Channel Islands, and eight convenience stores. In addition, our flagship Canary Wharf branch underwent a £15m refurbishment - the biggest ever undertaken by Waitrose - and recently relaunched as the first Food, Fashion & Home shop. A further 20 shops, including convenience, are planned to open in the second half of the year.

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