4


John Lewis Partnership plc Annual Report and Accounts 2015


During the year, we achieved strong sales with continued market outperformance. Good profit growth in John Lewis was offset by lower profitability in Waitrose. We have invested an additional £294m into the pension fund and reduced future risk by approving a new hybrid pension scheme.


Chairmans statement


WE ACHIEVED STRONG SALES WITH INCREASED MARKET SHARE AND CUSTOMER NUMBERS. HOWEVER, OUR UNDERLYING PROFIT DECREASED. WE EXPECT RETURNS FOR THE GROCERY SECTOR TO BE MATERIALLY LOWER FOR A PERIOD OF TIME.


Sir Charlie Mayfield Chairman, John Lewis Partnership


Overview


The Partnership achieved a strong sales performance with increased market share in both Waitrose and John Lewis, and customer numbers were up by 6% and 4% respectively. Profit before Partnership Bonus, tax and exceptional item is down 9.0% (down 10.5% on a 52 week basis), with increased profits in John Lewis offset by a decline in Waitrose.


Investment delivery in John Lewis


In its 150th year, John Lewis increased gross sales by 9.2% to £4.43bn (7.5% on a 52 week basis) and operating profit grew by 10.8% to £250.5m (10.4% on a 52 week basis). The investments made over many years in systems, logistics and IT infrastructure combined to enable John Lewis to make more deliveries via Click & Collect than to customers’ homes for the first time. John Lewis was able to fulfil over 6.4m orders over the year with 98.7% of parcels in-store the following day.


Challenging grocery market


Waitrose grew sales by 6.5% to £6.51bn (4.6% on a 52 week basis) with like-for-like sales up 1.4%. Operating profit fell by 23.4% to £237.4m (down 24.4% on a 52 week basis).


This was held back by three factors: the impact of trading in a highly competitive and deflationary market; a significantly higher level of investment in the year; and the impact of one-off items, including property impairments and onerous leases.


Partnership Bonus


Our 93,800 Partners received a Bonus of 11%, equivalent to nearly six weeks’ pay for Partners with us for the whole year. And for the first time in 15 years, thanks to new legislation that puts Employee Ownership on a similar footing to other forms of ownership, no Partner paid tax on their Bonus up to £3,600.


Sustainability


This year we concluded our CSR materiality assessment, prioritising the issues which are of the greatest importance to our stakeholders, our Partners and to the commercial health of the business. This assessment will underpin future decisions on sustainability and community investment and will help with our move to publishing an integrated Annual Report and Accounts.


Existing initiatives have continued to deliver tangible benefits to our business, the environment and the wider community.


More information can be found in the Performance section on pages 48 to 81,


Outlook 2015/16


We expect the returns for the grocery sector to be materially lower for a period of time. Waitrose’s value perception has improved significantly over the last few years and we will continue to defend that hard won position during this period of change in the grocery sector.


For John Lewis, the outlook is more robust. Our focus remains on positioning our brand to outperform and our investment in supply chain and systems, which has been growing for some years, will exceed that in new shops and refurbishment for the first time this year.


Sir Charlie Mayfield Chairman, John Lewis Partnership


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