TIDMBD45
RNS Number : 8134Y
Lewis(John)Partnership PLC
07 March 2012
Unaudited results for year to 28 January 2012
[This does not constitute a preliminary announcement]
Strict Stock Exchange Embargo, 9.30am
Wednesday 7 March 2012
John Lewis Partnership plc
Results for the year ended 28 January 2012
"Innovation in a changing market"
Financial Highlights
The John Lewis Partnership
-- Gross sales up GBP523.2m, 6.4%, to GBP8.73bn
-- Sales excluding VAT up GBP400.5m, 5.4% to GBP7.86bn
-- Group operating profit down GBP37.7m, 8.7%, to GBP393.3m
-- Profit before Partnership bonus and tax down GBP14.1m, 3.8%, to GBP353.8m
-- Partnership Bonus of GBP165.2m; 14% of salary (equal to over 7 weeks' pay)
Waitrose
-- Gross sales up GBP425.8m, 8.6%, to GBP5.40bn
-- Sales excluding VAT(1) up GBP372.4m, 7.9% to GBP5.07bn
-- Like-for-like sales up 3.6% (food only) (up 3.0% excluding VAT)
-- Operating profit down GBP14.3m, 5.2%, to GBP260.6m
John Lewis
-- Gross sales up GBP97.4m, 3.0%, to GBP3.33bn
-- Sales excluding VAT(1) up GBP28.1m, 1.0% to GBP2.79bn
-- Like-for-like sales up 1.3% (down 0.6% excluding VAT)
-- johnlewis.com sales up GBP141.7m, 26.3%, to GBP680.8m (up GBP111.2m, 24.2% excluding VAT)
-- Operating profit down GBP40.5m, 20.4%, to GBP157.9m
Operational Highlights
Waitrose
-- 29 new branches opened (14 supermarkets and 15 convenience
stores), Acton 'dark store' opened and one relocation in
2011/12
-- Selling space increased by 8.7%.
-- 400,000 more transactions per week
-- Launch of 'Love Life' range of healthy meals, You Count
calorie controlled range and Good to Go
John Lewis
-- John Lewis Stratford City opened September 2011
-- Two new "John Lewis at home" shops opened in Chester and Tamworth
-- Strong outperformance of johnlewis.com
-- Click & collect now in all John Lewis shops and 94 Waitrose shops
Partnership Highlights
-- Net 4,400 new jobs created; a further 1,900 expected this year
-- Invested GBP21.3m in improving our operating structures to deliver future efficiency gains
-- Invested GBP381m in benefits to our Partners, including
Partnership Bonus, pensions, Partner discount, catering subsidy,
long service leave, leisure spending and the running of our five
holiday centres
Charlie Mayfield, Chairman of John Lewis Partnership,
commented:
"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 to announce that all 81,000 Partners
will be receiving 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 this year 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."
Financial Results
2011/12 saw the Partnership navigate through a period of
difficult economic conditions, and deliver good sales growth in
Waitrose and John Lewis. Both Waitrose and John Lewis traded ahead
of their respective markets, increasing their market share.
The Partnership's gross sales were GBP8.73bn, an increase of
GBP523.2m, or 6.4%, on last year. Sales excluding VAT were
GBP7.86bn, up by GBP400.5m or 5.4%. Operating profit was GBP393.3m
(2010/11 GBP431.0m), a decrease of GBP37.7m, or 8.7% on last year,
representing an operating profit margin (excluding VAT) of 5.00%
(2010/11 5.77%). This measure best reflects trading performance
during the year.
Profit before Partnership Bonus and tax was GBP353.8m, a
reduction of GBP14.1m, or 3.8%, on last year, while cash generated
from operations grew to GBP759.1m, an increase of GBP14.0m or
1.9%.
Profit has been held back by planned investments, including
GBP21.3m in improving our operating structures to deliver future
efficiency gains, and pre-opening costs of GBP27.9m, up by GBP11.2m
on last year.
Partners continue to benefit from our generous final salary
non-contributory pension, but also have access to a number of other
benefits, such as Partner discount, catering subsidy, long service
leave, leisure spending and the running of our five holiday
centres, worth a total of GBP216m, and GBP381m including
Partnership Bonus.
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 GBP165.2m in cash, which
is 14% of pay or the equivalent of more than 7 weeks' pay.
Waitrose
Waitrose achieved sustained sales growth throughout 2011/12,
increasing its market share by 0.2% to 4.1% in the period and
increasing profits in the second half of the year.
Sales excluding VAT were up GBP372.4m, 7.9% to GBP5.07bn, and
food only like-for-like sales grew by 3.0% on an excluding VAT
basis. Planned investments in future growth, including immature
space and new formats, have held back profit for the year. There is
also a GBP1.9m impact relating to a change in the basis of
allocation of pension costs to the trading divisions. Operating
profit for the year was GBP260.6m, down GBP14.3m, or 5.2%.
Customers' perception of value in Waitrose has risen markedly in
response to the investments made over the past three years:
essential Waitrose, Brand Price Match and increased promotional
participation, up by 4% to 27.8%. In December 2011 we came top for
the third year running in the Which? Magazine supermarket
satisfaction survey.
Product innovation was particularly strong last year with three
new ranges launched: Love Life (the biggest launch since essential
Waitrose), Good to Go and Love Life You Count. The essential
Waitrose range grew by 10% and Waitrose own label products now
account for 54% of sales, 9% up on last year.
There were 400,000 more transactions a week compared to last
year as customers shopped across all formats: full weekly shops in
core branches and online, top-up shopping in convenience shops.
This confirms that the strategy of opening new branches alongside
the development of online and convenience is the right
approach.
Waitrose.com orders rose by 34.5% in the year. The service is
now available in 152 branches. Kantar Worldpanel data for the 52
weeks to 22 January 2012 showed us to be the fastest-growing online
grocery retailer.
We opened 29 new branches (14 supermarkets, 15 convenience) and
the Acton 'dark store' for online deliveries only. 13 were opened
in the second half year. The branch estate now totals 272, of which
28 are convenience shops. In September 2011 a two-site trial of
Little Waitrose convenience shops started on Shell Petrol
forecourts in Watford and Kensington Gardens. Four more Waitrose
outlets opened at Welcome Break motorway services in 2011, bringing
the total to 16. These strategic partnerships play an important
role in the drive to make Waitrose accessible to more people in
more places.
The growth of the branch network is supported by a new 300,000
sq ft warehouse in Milton Keynes which started delivering to
branches at the end of March 2011. A new distribution centre in
Leyland, Lancashire will open in 2013 and will service the planned
expansion in the North of England and Scotland.
John Lewis
John Lewis sales growth was good in the context of a challenging
market and the changing retail non-food environment. Sales
excluding VAT were up GBP28.1m (1.0%) to GBP2.79bn, while
like-for-like sales excluding VAT were 0.6% down. During 2011/12
all three Directorates, Fashion, Home and Electrical & Home
Technology (EHT), improved on the previous year's figures.
The success of "bricks and clicks" has been an important element
of our total sales growth. Online trade has continued its strong
performance (+24.2% excluding VAT) and is now fully integrated into
our operations which have all become multi channel. 'Click &
collect' is now available in all John Lewis shops and 94 Waitrose
branches, and is the fastest growing fulfilment route as customers
appreciate the convenience it offers. Shopping via mobile phone is
growing and currently two thirds of our shops have free WiFi to
enable customers to check prices as they shop.
Operating profit was GBP157.9m, down GBP40.5m, or 20.4%. This
includes a GBP6.4m impact relating to a change in the basis of
allocation of pension costs to the trading divisions. In addition
there were three main reasons for the remaining GBP34.1m of
decline. Despite the economic slowdown affecting sales growth, we
ensured that there was absolutely no compromise on quality, service
or value for customers. While an additional GBP23.8m was invested
in "Never Knowingly Undersold", gross margin was substantially
maintained. Secondly, with the opening of a new department store in
Stratford City and two 'at home' stores, profit was affected in the
short term by higher opening costs and lower profitability on
immature space. Thirdly, 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 we have made in service and
logistics drives sales in both channels. Therefore, while we
mitigated the profit impact by reducing costs, our priority is to
serve the multi-channel customer better than anyone else - it's on
that, and on innovation, that success in the future depends.
For that reason we prioritised innovation in product and in
formats. Last year we launched more new products than ever before.
This spanned over 30 new brand introductions, new own brand ranges,
and more designer collaborations. We also continued to transform
our presentation in fashion, home and technology. Three quarters of
the shop fit in Stratford was new concept. We will be extending
that to existing shops and to our first smaller format department
store opening in Exeter in October, which will be our most
integrated multi-channel shop, and in the 'at home' openings in
Newbury and Chichester. There will also be a full upgrade of the
johnlewis.com website.
We are also the Official Department Store Provider to this
year's London 2012 Olympic and Paralympic Games and look forward to
the important part we will play in the future of Stratford as a
vibrant retail centre in London.
Capital Expenditure
Capital spending in 2011/12 increased by GBP25m, an increase of
5.1%, to GBP518m.
Waitrose invested GBP293m, mainly on 29 new branches acquired or
built in the year and one relocation, together with 13
refurbishments and one extension.
John Lewis invested GBP182m. The mix of investment has reflected
the business strategy of opening new space, refurbishing key
regional shops and investing heavily in the IT and distribution
infrastructure to support multi-channel trading. Recent
strengthening of our supply chain enabled the business to deliver a
particularly strong Christmas online.
In addition, GBP43m was invested centrally, mainly in
maintaining and modernising our IT platforms, head office buildings
and the refurbishment of our holiday centres. Waitrose invested in
a replacement technology platform for its online business at a
total cost of GBP20m, with GBP8m of this in 2011/12.
Financing
In March 2011 the Partnership launched an innovative financing
product, the John Lewis Partnership Bond, raising a net GBP55.3m
after costs. Net debt was GBP576.9m, up GBP28.5m (5.2%). The
Partnership balance sheet remains strong.
Net finance costs decreased by GBP23.6m (37.4%) to GBP39.5m,
mainly because of a net credit of GBP23.8m in respect of the
financing elements of pensions and long service leave, compared to
a charge of GBP2.2m last year, driven by the expected return on
pension assets and changes in the corporate bond market which
underpin the calculation of these costs. These financing
calculations are determined by market conditions and can change
materially from one year to the next. Excluding pensions, long
service leave and other non-cash fair value adjustments, net
finance costs have reduced slightly, by GBP1.4m (2.3%) to
GBP60.3m.
Pensions
The total accounting pension deficit at January 2012 increased
by GBP224.1m (54.1%) to GBP638.1m. Net of deferred tax the deficit
was GBP502.3m. The accounting valuation of pension fund liabilities
increased by GBP295.0m (10.2%) to GBP3,175.0m, while pension fund
assets increased by GBP70.9m (2.9%) to GBP2,536.9m. The asset value
reflects improving market conditions and the sale, in March 2011,
of the remaining shares in the Ocado business.
Included within operating profit, the accounting charge for
pensions was GBP124.0m, up GBP1.1m or 0.9% on the prior year.
On an actuarial cash funding basis, we estimate that our defined
benefit final salary schemes ended the year almost in balance with
a small deficit of GBP10m. In addition there is approximately
GBP10m of unfunded pension liabilities.
The main differences between the funding basis and the
accounting basis relates to different economic assumptions which
are required to be used for accounting purposes, totalling GBP538m,
and the exclusion of the fund's investment in JLP Scottish Limited
Partnership of GBP95m for accounting purposes.
Corporate Social Responsibility
Corporate social responsibility (CSR) has always been part of
the way we do business. Our commitment to acting responsibly is
strengthened by our values of respect, honesty and fairness; by
sharing the rewards and responsibilities of ownership; and by
conducting our business with integrity and courtesy.
Our programmes received independent recognition at the People
and Environment Business Awards in January this year; winning
awards for CSR as well as Building & Construction as a result
of incorporating responsible and sustainable development into all
our building and construction work. For example, Waitrose Stratford
City was awarded an 'outstanding' rating by the Building Research
Establishment Environmental Assessment Method (BREEAM); the first
outstanding rating in the world for a retail building. John Lewis
Stratford City, our greenest ever department store, has set a new
industry benchmark for retail, and represents a 60% reduction in
carbon footprint compared to our last department store, due to
features like the innovative displacement ventilation system.
In Waitrose, we are working on The Prince's Trust 'Get Into'
scheme. There was a trial run at our Aylesford distribution centre
in 2011 and in 2012 we will offer 100 work placements in
distribution, head office and branches. When John Lewis opens a
department store, we recognise that we have a vital role to play in
contributing to the long-term prosperity of the local area and with
John Lewis Stratford City, which opened in September 2011, we
worked with the Retail Works programme to support pre-employment
courses for individuals from the local area who had been unemployed
for six months or more and were seeking employment. As a result 275
candidates were successful.
2012/13 Outlook
After five weeks, Partnership sales excluding VAT are 7.7%
higher than last year. Waitrose sales excluding VAT have increased
by 8.9% (2.2% like-for-like) and John Lewis sales excluding VAT are
5.2% higher than last year (2.4% like-for-like).
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.
-ends-
Further information John Lewis Partnership Andrew Moys, Director
of Communications 07525 272377
Neil Spring, Senior Communications Manager 07890 777464 Citigate
Dewe Rogerson Simon Rigby / Justin Griffiths 020 7638 9571 John
Lewis Helen Dickinson, Head of Communications 07785 952567
Amy Shields, Senior Manager, Corporate, Digital & Branch PR 07525 273077 Waitrose Christine Watts, Communications Director 07764 676414
John Gregson, Senior PR Manager, Corporate 07525 271618
Gill Smith, Senior Manager, Corporate PR 07887 898133 Notes to
editors
The John Lewis Partnership - The John Lewis Partnership operates
35 John Lewis shops across the UK (29 department stores and six
John Lewis at home), johnlewis.com and 274 Waitrose supermarkets.
The business has annual gross sales of over GBP8.7bn. It is the
UK's largest example of worker co-ownership where all 81,000 staff
are Partners in the business.
Waitrose - Waitrose, Britain's favourite supermarket*, has 274
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
for online growth, as well as a long term commitment to sourcing
the UK's finest local and regional foods. Waitrose own-label ranges
now account for 54% of sales. 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
John Lewis - John Lewis, 'Britain's favourite retailer 2011'*
and 'Best Multichannel Retailer 2011' **, typically stocks more
than 350,000 separate lines in its department stores. The website
stocks over 180,000 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, March 2011 ** Ecommerce
Awards for Excellence 2011
John Lewis Partnership plc
UNAUDITED RESULTS FOR THE YEAR TO 28 January 2012
2011/12 2010/111 Change
GBPm GBPm %
CONTINUING OPERATIONS
SALES
Waitrose 5,400.4 4,974.6 8.6
John Lewis 3,329.1 3,231.7 3.0
Total gross sales 8,729.5 8,206.3 6.4
Adjustment for sale or
return sales (120.7) (116.0)
Value added tax (850.2) (728.5)
Revenue 7,758.6 7,361.8 5.4
----------------------------------------------------------- --------- ---------- --------
OPERATING PROFITS
Waitrose 260.6 274.9 (5.2)
John Lewis 157.9 198.4 (20.4)
----------------------------------------------------------- --------- ---------- --------
418.5
11 473.3 (11.6)
Corporate and
other 2 (25.2) (42.3) 40.4
----------------------------------------------------------- --------- ---------- --------
Operating profit 393.3 431.0 (8.7)
Net finance costs (39.5) (63.1) 37.4
----------------------------------------- ------------------ --------- ---------- --------
Profit before Partnership bonus
and tax 353.8 367.9 (3.8)
Partnership bonus (165.2) (194.5) 15.1
----------------------------------------- ------------------ ---------
Profit before tax 188.6 173.4 8.8
----------------------------------------- ------------------ --------- ---------- --------
Notes
1. The comparatives have been re-presented in respect of John Lewis
Insurance to be on a consistent basis to the current year.
2. Corporate and other principally includes corporate and shared
service overheads, transformation costs and Partnership Services
division. In 2011/12 pension operating costs are charged to Waitrose
and John Lewis as a proportion of total pay, with year on year volatility
of income of GBP16.8m recognised in Corporate and other.
This statement does not constitute a preliminary announcement. These
results are subject to audit. The Annual Report & Accounts for 2011/12
will be published in April.
====================================================================================================
This information is provided by RNS
The company news service from the London Stock Exchange
END
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