John Lewis Partnership plc annual report and accounts 2012

Operating profit was £157.9m, down £40.5m, or 20.4%. This includes a £6.4m impact relating to the change in the basis of allocation of pension costs as explained in note 2 to the accounts. The remaining £34.1m of decline was a result of the decision to ensure there was absolutely no compromise on quality, service or value for customers. While an additional £23.8m was invested in “Never Knowingly Undersold”, gross margin was substantially maintained. The opening of a new department store in Stratford City and two ‘at home’ stores in Tamworth and Chester has impacted profit in the short term through higher opening costs and lower profitability on immature space. Although sales were lower in nearly all our established shops, it is the same customer shopping with us online and in our shops and the investment made in service and logistics drives sales in both channels. Therefore, while the profit impact was in part mitigated by reducing costs, the priority was to serve the multi-channel customer better than anyone else which, together with innovation, will ensure our future success and therefore our priority remains focussed on innovation in product and in formats.

Operating margin (excluding VAT) was down from 7.18% to 5.66% on last year. Operating profit per square foot decreased by 24.0%, from £50 to £38, and operating profit per FTE decreased by 21.1%, from £9,000 to £7,100.

Graph showing John Lewis Operating profit (£m) and margin(1)

Graph showing Operating profit per square foot (selling space) (£)(1)

Graph showing John Lewis Operating profit per FTE (£’000)(1) 10

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