TIDMBD45
RNS Number : 5675C
Lewis(John)Partnership PLC
09 March 2011
Unaudited results for year to 29 January 2011
[This does not constitute a preliminary announcement]
Strict Stock Exchange Embargo, 9.30am
Wednesday 9 March 2011
John Lewis Partnership plc
Results for the year ended 29 January 2011
"Strong performance by our Partners enhanced by a focus on
value, multi-channel growth and new formats"
Financial Highlights
The John Lewis Partnership
-- Gross sales up GBP784.8m, 10.6%, to GBP8.21bn
-- Group operating profit up GBP41.3m, 10.6%, to GBP431.0m
-- Profit before Partnership bonus and tax up GBP61.3m, 20.0%,
to GBP367.9m
-- Partnership Bonus of GBP194.5m; 18% of salary (equal to more
than 9 weeks' pay)
Waitrose
-- Gross sales up GBP442.3m, 9.8%, to GBP4.97bn
-- Like-for-like sales up 4.0% (food only, excludes petrol)
-- Operating profit up GBP8.1m, 3.0%, to GBP274.9m
John Lewis
-- Gross sales up GBP342.5m, 11.9%, to GBP3.23bn
-- Like-for-like sales up 10.0%; JL.com sales up GBP147.9m,
37.9%, to GBP538.2m
-- Operating profit up GBP36.5m, 22.2%, to GBP201.2m
Operational Highlights
Waitrose
-- 20 new shops opened in 2010/11 plus 3 relocations, selling
space increasing by 5.7%.
-- Average weekly number of customers increased by around
300,000
-- Launch of Brand Price Match and further extension of
essential Waitrose
-- Acquisition of 5 stores in Channel Islands
-- Extension of Welcome Break partnership and Boots trial
John Lewis
-- Successful opening of 3 John Lewis at home stores in Croydon,
Tunbridge Wells and Swindon
-- John Lewis at Olympic site in Stratford on track to open in
2011
-- Strong outperformance of JL.com
-- Extension of Never Knowingly Undersold promise to online
Partnership Highlights
-- Net 4,100 new jobs created; a further 4,300 expected this
year
-- GBP150m one-off additional cash contribution in March 2010 to
final-salary pension scheme
-- Invested around GBP90m in benefits to our Partners, including
Partners discount, catering subsidy, long service leave, leisure
spending and the running of our five holiday centres
Charlie Mayfield, Chairman of John Lewis Partnership,
commented:
The Partnership has achieved market-beating sales growth and a
healthy increase in profits.
It's the result of our 76,500 Partners' determination to give
customers the best possible shopping experience. We have renewed
our commitment in both Waitrose and John Lewis to improving the
value we offer to customers and broader ranges and innovative
marketing have attracted more customers and boosted our market
share.
The Partnership has clearly established itself as a leader in
multi-channel retailing. Our investment over many years in JL.com
and our growing presence in Waitrose Deliver together with our
supply relationship with Ocado, have brought our offer to more
people in more parts of the country and these initiatives have been
at the forefront of our growth and innovation. We have made great
progress this year in combining our John Lewis online operations
with our shops to offer our customers greater choice and
flexibility. We are trialling new formats such as "John Lewis at
home" and Waitrose convenience and the results are encouraging.
We're a long-term business, held in trust for the benefit of our
Partners. This has given us, we believe, significant competitive
advantage. We've been able to accelerate our investment during the
recession creating around 7,500 new jobs. Where we have made
significant changes to the structure of our business, we have done
so by engaging Partners. And, most important of all, our Partners
have shown their commitment to continually improving what we do
every day.
The profits we make go to Partners and to improving the business
for the future.
I'm delighted that today we've announced that Partners will
receive a bonus of 18%, an average of more than 9 weeks' pay. In
addition we have paid GBP267m into our pension fund in the last
year. We continue to offer a non-contributory final salary pension
to Partners with more than 3 years service and our main pension
fund has moved into surplus on a funding basis.
Looking to the future, while we expect more difficult conditions
for much of the year, we are confident of our plans. We have not
yet seen inflation coming through at the levels reported and we
remain committed to improving value for our customers in the year
ahead. We will invest GBP0.6bn this year and expect to create 4,300
new jobs.
Financial Results
2010/11 saw the Partnership reap the benefit of decisions taken
to invest during the recession, resulting in strong sales growth in
both John Lewis and Waitrose. Throughout the year both Waitrose and
John Lewis traded ahead of their respective markets. They increased
market share, developed their online offers, opened new stores and
new formats while continuing to improve and innovate in their shops
across the country.
The Partnership's gross sales were GBP8.21bn, an increase of
GBP784.8m, or 10.6%, on last year. Operating profit was GBP431.0m
(2009/10 GBP389.7m), an increase of GBP41.3m, or 10.6% on last
year, representing an operating profit margin of 5.25% (2009/10
5.25%). This measure best reflects trading performance during the
year.
Profit before Partnership Bonus and tax was GBP367.9m, an
increase of GBP61.3m, or 20.0%, on last year and cash generated
from operations grew to GBP745.1m, an increase of GBP97.5m or
15.1%.
We have continued to invest in our Partners not only through
salary, pension and bonus but also the provision of numerous other
benefits, such as discount, catering subsidy, leisure spending and
the running of our five holiday centres, worth around GBP90m.
These results reflect the collective hard work of our Partners
who as co-owners will each receive the same percentage of annual
pay as a cash bonus. Partners will share GBP194.5m in cash, which
is 18% of pay or the equivalent of more than 9 weeks' pay.
Waitrose
Waitrose traded strongly through the year, achieving among the
best margins of the sector.
Waitrose concentrated on attracting more new customers through
investing in value, innovative top-tier ranges, new space and new
formats. These investments succeeded in attracting on average
around 300,000 new weekly customers.
As a result, gross sales were GBP4.97bn, up 9.8%, or GBP442.3m.
Food only like-for-like sales grew 4.0%, excluding petrol.
Operating profit increased to GBP274.9m, up GBP8.1m, or 3.0%.
On value, Waitrose boosted its position with the launch in
September of Brand Price Match, a long-term commitment to price
match Tesco on 1,000 branded products, which sits alongside the
essential Waitrose range. This combination means customers know
they can get their weekly shop at Waitrose without sacrificing
either value or quality.
Waitrose's credentials for good food, fine quality ingredients
and cooking were further strengthened with the arrival of Delia
Smith and Heston Blumenthal as brand ambassadors in March 2010. The
successful marketing campaign - across advertising, online and
publications - is attracting new customers and generating
substantial incremental sales of around GBP50m.
Waitrose has an unmatchable top tier of product ranges and
innovation continued throughout 2010 with the launch of Menu From
Waitrose, Duchy Originals From Waitrose and Heston From Waitrose.
Another significant development that underlines the Waitrose
commitment to quality cooking was the launch of the UK's first
supermarket cookery school in November 2010.
The online business went from strength to strength and is poised
for further growth as it moves onto a new technology platform, and
within the M25 without restriction from July this year.
Twenty new branches were opened during the year plus three
relocations, which represents an additional 253,000 sq ft, 5.7 per
cent, of selling space. Nine of these new shops are in the
convenience format, including three in the new small convenience
format. Five shops were acquired in the Channel Islands. The first
opened in Jersey last month, and is so far trading successfully,
and the first branch in Guernsey opens tomorrow.
Two key strategic partnerships have taken Waitrose to many more
customers in a range of settings. Welcome Break service stations
outlets are performing ahead of expectations, with two more planned
later this month. The trial with Boots continues to show
encouraging results at this early stage.
Waitrose's investment was not only in new and refurbished shops,
but also in infrastructure, where it has invested GBP64.3m during
the year. In July 2010 a new 100,000 sq ft chilled warehouse was
opened in Bracknell and the "end-to-end" focus on operational
efficiency in our supply chain generated substantial savings. These
investments are critical to driving efficiencies, creating further
capacity for growth and delivering profit margins.
John Lewis
John Lewis performed well-ahead of expectations, consistently
beating competitors in both shops and online.
Gross sales were GBP3.23bn, up 11.9% or GBP342.5m. Like-for-like
sales were up 10.0% during the year. Operating profit increased by
GBP36.5m, or 22.2% to GBP201.2m, and has returned to pre-recession
levels.
All areas of the business have traded well, and continue to gain
market share, demonstrating the appeal and relevance of the offer.
Each category achieved strong sales growth: Fashion by 14.7%, Home
by 12.3% and Electricals & Home Technology (EHT) by 8.4%.
John Lewis' multichannel and online operations were critical to
this success. JL.com achieved sales of GBP538.2m, up GBP147.9m, or
37.9%, and well ahead of expectations. This was achieved by
increasing the number of products sold online, investing further in
the development of the Magna Park distribution facility and
extending services such as Click & Collect which gives
customers greater flexibility in their shopping. Customers can now
click and collect from all John Lewis branches and 24 Waitrose
branches.
A key driver of online sales growth was the fashion category
which continues to strengthen with new brands such as Ghost, Armani
and Mint Velvet. These online initiatives have been recognised by
Which? awarding JL.com "online retailer of the year".
The Never Knowingly Undersold (NKU) pricing commitment was
strengthened through its extension to the online price of "bricks
and clicks" competitors.
In 2011 the JL.com delivery catchment will be extended to cover
international locations, initially within Europe, the Nordic
countries and Ireland.
John Lewis has transformed the look of its fashion floors which
reflects a determination to have an unbeatable range and
presentation in fashion. Customer appeal remains broad with a
choice of products from value to premium, with an emphasis on
innovation throughout the offer.
The accessibility of John Lewis continues to improve with three
further "at home" shops opening in Croydon, Swindon and Tunbridge
Wells. Customers have responded well to the new format with three
further openings planned this year.
John Lewis continues the growth of its estate with an exciting
new department store on the Olympic site at Stratford, opening
later this year, and it will continue to work with property
developers to explore potential new locations in key city centres
in the United Kingdom such as the recently announced Birmingham
shop. The importance of the existing estate is reflected in an
ongoing refurbishment programme which is improving infrastructure
and introducing innovative new retail concepts.
John Lewis will be the Official Department Store Provider to the
London 2012 Olympic Games and Paralympic Games and recognises the
important part it will play in the future of Stratford as a vibrant
retail centre.
During the year it relaunched the insurance business under the
John Lewis brand with encouraging results.
John Lewis' reputation for outstanding quality, value and
service was recognised by Verdict, awarding it "Britain's favourite
retailer" in 2011 for the 8th time in the award's 12 years.
Capital Expenditure
Capital spending in 2010/11 increased by GBP48m, +10.7%, to
GBP493m. Waitrose invested GBP354m, mainly on 20 new stores
acquired or built during the year, 3 relocations and the
acquisition of 5 Channel Island stores. John Lewis invested
GBP120m, opening three "at home" stores, rolling out the new
Womenswear concept to nine branches, and investing in a new full
line department store at Stratford, which will open in September
2011. In addition, GBP19m was invested centrally, mainly in
maintaining and modernising our IT platforms, head office buildings
and the refurbishment of our holiday centres.
Financing
In July 2010 the Partnership issued a GBP300m bond repayable in
2025 and bought back GBP158m of the bond due in 2012, reducing our
average cost of borrowing, extending our borrowing maturity and
reducing our refinancing risk. At the year end net debt stood at
GBP548.4m. The Partnership balance sheet remains strong and we are
well within the limits of our financial covenants.
On 7 March, we launched an innovative financing product, the
John Lewis Partnership Bond which offers a competitive fixed return
to investors, 4.5% plus 2% in John Lewis Partnership gift
vouchers.
Net finance costs have decreased by GBP20.0m (24.1%) to
GBP63.1m, mainly because of a GBP38.0m (94.5%) reduction, to
GBP2.2m, in the financing elements of pensions and long service
leave, driven by changes in the corporate bond market which
underpin the calculation of charges and liabilities. These
financing calculations are determined by market conditions and can
change materially from one year to the next. Excluding pensions and
long service leave, net finance costs have increased by GBP18.0m
(42.0%) to GBP60.9m, mainly due to the refinancing exercise which
incurred a premium of GBP9.2m on the partial buyback of the 2012
Bond.
Pensions
The triennial actuarial valuation of our main non-contributory
defined benefit final salary scheme as at 31 March 2010 has
concluded with a surplus of GBP83m, which we estimate has grown to
GBP105m at the end of this financial year.
The total accounting pension deficit at January 2011 decreased
by GBP490.6m (54.2%) to GBP414.0m. Net of deferred tax the deficit
was GBP327.1m. The accounting valuation of pension fund liabilities
increased by GBP27.0m (0.9%) to GBP2,880.0m, while pension fund
assets increased by GBP517.6m (26.6%) to GBP2,466.0m. The asset
value reflects improving market conditions and steps taken to
mitigate the pension deficit, including a GBP150m one-off cash
contribution made into the Pension Fund in March 2010. During the
year the Pension Fund took the opportunity to reduce its stake in
the Ocado business at the time of its Initial Public Offering
(IPO), and since year end has sold the remaining shares in this
business, realising in total GBP250m from an asset that cost the
Partnership GBP80m.
Included within operating profit, the accounting charge for
pensions was GBP122.9m, up 24.3% or GBP24.0m on the prior year, due
mainly to an adverse movements in corporate bonds.
Corporate Social Responsibility
The Partnership values, and takes great care of its
relationships with its Partners, customers, suppliers, the
environment and the wider community. Over the last year, this has
resulted in a new emissions reduction target, strengthened product
sourcing policies and increased charitable and community
contributions.
The Partnership is committed to a 15% absolute reduction of
operational CO(2) equivalent emissions by 2020/21 against a 2010/11
base. This commitment includes ambitious new plans, such as
developing renewable energy generation centres at our stores.
Waitrose is focused on four strategic themes: Treating People
Fairly, Living Well, Treading Lightly and British & Local
Sourcing. On the latter, one of its key activities is involvement
in, and support for, The Prince's Countryside Fund, set up to
secure a sustainable future for British agriculture and the wider
rural economy.
John Lewis has a new vision of 'Bringing Quality to Life'
through sustainable living and working at a local level with
communities and Partners. All John Lewis own brand packaging is now
made from either recycled or Forest Stewardship Council materials
and it continues to launch new sustainable ranges.
Our Partners have given over 200,000 hours to more than 490 UK
charities since our flagship volunteering programme, the Golden
Jubilee Trust, was established in 2000. To build on this success,
we are considering creating new Partnership-wide employee
volunteering opportunities to enable large-scale Partner
involvement in the communities where we do business.
2011/12 Outlook
After five weeks, Partnership gross sales are 6.5% higher than
last year. Waitrose gross sales have increased by 8.9% (5.1%
like-for-like) and John Lewis gross sales are 2.3% higher than last
year (0.5% like-for-like).
We expect trading conditions to be more difficult in 2011, as
the VAT increase, rising unemployment, and public sector spending
cuts begin to have an impact on consumer spending. Input cost price
inflation is also a continuing threat but we are not yet seeing the
level of inflation in our prices that is widely quoted. There are
two principal reasons for this: firstly, some of the inflationary
pressures are being absorbed by us and offset by increased
efficiency and secondly, customers are becoming increasingly
sophisticated in their ability to shop through our expanding ranges
from premium to value and manage their own expenditure
carefully.
We are also encouraged that some parts of the British economy
are improving slightly. We are seeing some early signs that
property developers are willing to invest in new projects and
developments and we expect further progress this year on our store
expansion pipeline.
Our model allows us to take a longer-term view, which enabled us
to continue to invest through the recession and the benefit of that
has been clearly seen in our results today. Despite the more
challenging conditions we expect in 2011, we plan to continue with
our investment programme and in the current year we will invest
around GBP0.6bn, creating around 4,300 new jobs.
-ends-
Further information
John Lewis Partnership
Andrew Moys, Director of Communications 020 7592 6292
Citigate Dewe Rogerson
Simon Rigby / George Cazenove 020 7638 9571
John Lewis 020 7592 6274
Helen Dickinson, Head of Communication 020 7592 6223
Louise Cooper, Senior Manager, Corporate,
Digital & Branch PR
Waitrose 07764 676414
Christine Watts, Communications Director 07887 898133
Gill Smith, Senior PR Manager, Corporate
Notes to editors
The John Lewis Partnership - The John Lewis Partnership operates
32 John Lewis shops across the UK (28 department stores and four
John Lewis at home), johnlewis.com and 244 Waitrose supermarkets.
The business has annual gross sales of over GBP8.2bn. It is the
UK's largest example of worker co-ownership where all 76,500 staff
are Partners in the business.
Waitrose - Waitrose, Britain's favourite supermarket*, has 244
shops in the UK and is consistently achieving sales growth
significantly ahead of the market.**. Its strong performance has
been driven by the success of the essential Waitrose range, Brand
Price Match, an unmatchable top tier of products and free delivery
driving rapid online growth, as well as a long term commitment to
sourcing the UK's finest local and regional foods. Waitrose
combines the convenience of a supermarket with the expertise and
service of a specialist shop - dedicated to offering quality food
that has been responsibly sourced combined with high standards of
customer service. www.waitrose.com
* Which? Annual Supermarket Satisfaction Survey, Telegraph
Magazine Shop Awards - Best for Food & Drink; BBC Watchdog -
Britain's Favourite Supermarket; Good Housekeeping Awards,** Kantar
World panel
You can follow Waitrose on the following social media
channels:
www.facebook.com/waitrose
www.twitter.com/waitroseuk
www.twitter.com/waitrosewine
www.youtube.com/waitrose
John Lewis - John Lewis, 'Britain's favourite retailer 2010'*
and 'Multiple Department Store of the Year 2010' ** typically
stocks more than 350,000 separate lines in its department stores.
The website stocks over 150,000 products focused on the best of
fashion, beauty, home and giftware and electrical items including
online exclusives. johnlewis.com is consistently ranked one of the
top online shopping destinations in the UK. ( www.johnlewis.com ).
John Lewis Insurance offers a range of comprehensive insurance
products - home, car, wedding and event, travel and pet insurance
and life cover - delivering the usual values of expertise, trust
and customer service expected from the John Lewis brand.
* Verdict consumer satisfaction index, January 2011
** The Drapers Awards for fashion retail, November 2010
You can follow John Lewis on the following social media
channels:
www.johnlewis.com/twitter
www.johnlewis.com/facebook
www.johnlewis.com/youtube
John Lewis Partnership plc
UNAUDITED RESULTS FOR THE YEAR TO 29 January 2011
2010/11 2009/101 Change
GBPm GBPm %
CONTINUING OPERATIONS
SALES
Waitrose 4,974.6 4,532.3 9.8
John Lewis 3,231.7 2,889.2 11.9
Total gross sales 8,206.3 7,421.5 10.6
Adjustment for sale or
return sales (116.0) (116.5)
Value added tax (728.5) (570.4)
Revenue 7,361.8 6,734.6 9.3
-------------------------- -------- -------- ---------- ------------ -------------
OPERATING PROFITS
Waitrose 274.9 266.8 3.0
John Lewis 201.2 164.7 22.2
-------------------------- -------- -------- ---------- ------------ -------------
476.1
11 431.5 10.3
Corporate and
other 2 (45.1) (41.8) (7.9)
-------------------------- -------- -------- ---------- ------------ -------------
Operating profit 431.0 389.7 10.6
Net finance costs (63.1) (83.1) 24.1
-------------------------- -------- -------- ---------- ------------ -------------
Profit before Partnership bonus
and tax 367.9 306.6 20.0
Partnership bonus (194.5) (151.3) (28.6)
-------------------------- -------- -------- ----------
Profit before tax 173.4 155.3 11.7
-------------------------- -------- -------- ---------- ------------ -------------
Notes
1. The comparatives have been re-presented to allocate certain shared
service overheads on a consistent basis to the current year, as
shown below:
As As
published Adjustments re-presented
Operating
profits GBPm GBPm GBPm
Waitrose 268.4 (1.6) 266.8
John Lewis 165.9 (1.2) 164.7
Corporate and
other (44.6) 2.8 (41.8)
---------- ------------ -------------
Operating
profits 389.7 - 389.7
Net finance
costs (83.1) - (83.1)
---------- ------------ -------------
Profit before Partnership
bonus and tax 306.6 - 306.6
Partnership
bonus (151.3) - (151.3)
---------- ------------ -------------
Profit before
tax 155.3 - 155.3
---------- ------------ -------------
2. Corporate and other costs include corporate and shared service
overheads, Partnership Services and other.
3. Property gains are included in the operating profits shown above
and are as follows:
Operating profit
excluding
Property gains property gains % change
------------------ ------------------------ -------------
2010/11 2009/10 2010/11 2009/10
GBPm GBPm GBPm GBPm
Waitrose 1.9 0.2 273.0 266.6 2.4%
John Lewis - - 201.2 164.7 22.2%
-------- -------- ---------- ------------ -------------
1.9 0.2 474.2 431.3 9.9%
-------- -------- ---------- ------------ -------------
4. This statement does not constitute a preliminary announcement.
These results are subject to audit. The Annual Report & Accounts
for 2010/11 will be published in April.
=======================================================================================
This information is provided by RNS
The company news service from the London Stock Exchange
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