Economy

Waitrose Sales Rise, But Costs See John Lewis Profits Fall 22%

Waitrose Sales Rise, But Costs See John Lewis Profits Fall 22%

"As we anticipated, 2017 was a challenging year", said Sir Charlie Mayfield, chairman of John Lewis Partnership.

Gross sales for the full-year period were 2 percent higher at 11.6 billion pounds, the retailer said, adding that the outlook for 2018/19 remained hard.

The John Lewis Partnership has cut its renowned staff bonus to 5% of salary as it posted a 77% plunge in pre-tax profits to £103.9 million for the year to January 27.

It has cut the bonus for five years running now, down from 6 per cent last year and as much as 17 per cent in 2013.

Sir Charlie added: "We said in January 2017 that we were preparing for tougher trading conditions, with weakness in sterling feeding through into cost prices".

Sales at both retail chains were "significantly impacted" by heavy snow in the United Kingdom last week.

More news: Trump piles pressure on China over trade, to push ahead with tariffs

John Lewis Partnership has revealed diving profits in its full-year results as "intensifying margin pressure" at Waitrose drags down figures.

However, operating profit fell 32.1% to £172 million, which the company attributes to its decision not to pass on all cost price inflation to its customers, as well as investments in its supermarkets.

Looking ahead, John Lewis Partnership says that it expects trading to be volatile in 2018/2019, with continuing economic uncertainty and increasing competition.

Waitrose saw like-for-like sales grow by 0.9% but at the expense of a 42% dive in operating profits, as higher costs were not passed on in prices.

Like other United Kingdom retailers, John Lewis has been implementing more flexible working arrangements in a bid to hold down staffing costs amid increases in the U.K.'s minimum wage.

The profitability of Waitrose dropped as the company made a decision to improve its competitiveness by not passing on all cost inflation, instead lowering prices on hundreds of products.


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