30 John Lewis Partnership plc Annual Report and Accounts 2016 Partnership performance


The Partnership delivered solid sales and increased market share in a challenging retail environment.


Principles in this section 1 Purpose


2 Power relationships


4 Partners 6 Business


3 Profit


5 Customers 7 The


community


5 6


7 1


4


Highlights


a Gross sales up 2.5% and revenue up 2.2% on a 52-week basis (0.7% and 0.5% on a 53-week basis)


2 3


a Profit before tax, Bonus and exceptional items was £305.5m down 9.3% on a 52-week basis (10.9% on a 53-week basis), in line with expectations; entirely due to higher pension charges arising from volatility in the market-driven assumptions, and lower property profits – excluding these factors, profits up around 9% on a 52-week basis (around 7% on a 53-week basis)


a Operating profit before property profits up £8.7m (3.9%) in Waitrose and £1.8m (0.7%) in John Lewis on a 52-week basis, both impacted by a higher share of central costs as well as restructuring costs in John Lewis


a Including property profits, operating profit down 0.8% in Waitrose and up 0.2% in John Lewis on a 52-week basis (down 2.0% and down 0.1% on a 53-week basis)


a Strong cash generation driven by good cost control, lower capital investment and the sale of the Clearings building


a Net debt of £372.5m, £349.2m (48.4%) lower than January 2015 and consistent with our strategy of a stronger balance sheet


a Pension deficit of £941.6m, £307.7m (24.6%) lower than January 2015


a Partnership Bonus of £145.0m; 10% of salary (equivalent to more than 5 weeks’ pay for Partners with us for the whole year) down from 11% in 2014/15


Challenges


a The operating cost of our pension scheme increased by £54.2m (28.4%) to £245.3m


a Deflation in grocery of -2.6% has subdued profitability in the non-food market


a The continued growth in omnichannel trading is driving significant investment to adjust our operating model


Outlook


We started 2016/17 with stronger like-for-like sales, but expect conditions in the market will remain difficult, especially in grocery. Our focus is on strengthening our balance sheet so that we can take full advantage of the opportunities these changes will create to develop our customer offer and our Partners.


“ While our profit has declined, market share growth, continued infrastructure investment and a stronger balance sheet have set us up well for future success.”


Patrick Lewis Group Finance Director


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