John Lewis Partnership plc annual report and accounts 2012

Chairman’s statement

We have achieved a good sales performance in a tough year for the economy. Profits are lower than last year, but better than expected and I'm delighted that all 81,000 Partners received a bonus equivalent to over 7 weeks’ pay.

Profound changes are taking place in the retail sector and importantly this was a year when we upped the pace of innovation and investment. That came at the price of some short-term profit but leaves us in a good place at the start of this year.

Pretty much anything can now be sold online, and our ability to originate and source unique products that our customers want and only we can sell will become more and more important. In Waitrose we increased the number of new products launched by 76%, and in John Lewis, from fashion through to home, we saw the launch of ranges such as John Lewis & Co through to the Design Collective. We also increased our reputation for value with harder hitting promotions in Waitrose, and a total commitment to Never Knowingly Undersold in John Lewis.

Customers also want more convenience from shops and online and we pushed on with growth, opening more shops in a single year than ever before with 29 Waitrose shops and three for John Lewis. Simultaneously we made it easier to shop across Waitrose and John Lewis - Click & collect has been a huge hit with customers. By the end of the year it was available in 129 shops, up from 55 at the start of the year. Over a fifth of all sales in John Lewis are now online and waitrose.com was relaunched and extended across London.

To meet the challenges presented by a rapidly developing retail sector, we’ve made some significant changes to how the Partnership operates. Examples include overhauling how we run Waitrose shops and expanding our new internal shared services division, Partnership Services, as well as the largest programme of investment we have ever mounted in systems and supply chain.

We start 2012/13 leaner and fitter and have initiatives underway which will deliver key benefits in the coming years. We have first-class brands that are well placed to succeed in a changing market.

2012/13 Outlook

After 11 weeks, Partnership sales excluding VAT are 9.0% higher than last year. Waitrose sales excluding VAT1 have increased by 8.4% (2.9% like-for-like) and John Lewis sales excluding VAT are 10.1% higher than last year (7.0% like-for-like). The 2012/13 sales include those for the Easter weekend, which have a beneficial impact on sales, whereas in 2011/12 Easter fell later in April.

Current trading conditions are still difficult and consumer confidence remains subdued. Despite that we are continuing to grow faster than the market. We are prepared and have shown that we can trade well through these conditions. The Queen’s Diamond Jubilee and the London 2012 Olympic and Paralympic Games will provide a lift for consumers and I am cautiously optimistic that trading conditions may improve later this year.

Charlie Mayfield

Chairman

23 April 2012

1 Sales excluding VAT are gross sales net of value added tax.

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