Press releases

John Lewis Partnership plc Results for the year ended 28 January 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

'Innovation in a changing market'


Financial Highlights


The John Lewis Partnership

  • Gross sales up £523.2m, 6.4%, to £8.73bn
  • Sales excluding VAT[1] up £400.5m, 5.4% to £7.86bn
  • Group operating profit down £37.7m, 8.7%, to £393.3m
  • Profit before Partnership bonus and tax down £14.1m, 3.8%, to £353.8m
  • Partnership Bonus of £165.2m; 14% of salary (equal to over 7 weeks' pay)


  • Gross sales up £425.8m, 8.6%, to £5.40bn
  • Sales excluding VAT[1] up £372.4m, 7.9% to £5.07bn
  • Like-for-like sales up 3.6% (food only) (up 3.0% excluding VAT)
  • Operating profit down £14.3m, 5.2%, to £260.6m

John Lewis

  • Gross sales up £97.4m, 3.0%, to £3.33bn
  • Sales excluding VAT[1] up £28.1m, 1.0% to £2.79bn
  • Like-for-like sales up 1.3% (down 0.6% excluding VAT)
  • sales up £141.7m, 26.3%, to £680.8m (up £111.2m, 24.2% excluding VAT)
  • Operating profit down £40.5m, 20.4%, to £157.9m

Operational Highlights


  • 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
  • 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 £21.3m in improving our operating structures to deliver future efficiency gains
  • Invested £381m 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

[1] Sales excluding VAT are defined as gross sales net of value added tax

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 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 £8.73bn, an increase of £523.2m, or 6.4%, on last year. Sales excluding VAT[1] were £7.86bn, up by £400.5m or 5.4%. Operating profit was £393.3m (2010/11 £431.0m), a decrease of £37.7m, 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 £353.8m, a reduction of £14.1m, or 3.8%, on last year, while cash generated from operations grew to £759.1m, an increase of £14.0m or 1.9%.

Profit has been held back by planned investments, including £21.3m in improving our operating structures to deliver future efficiency gains, and pre-opening costs of £27.9m, up by £11.2m 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 £216m, and £381m 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 £165.2m in cash, which is 14% of pay or the equivalent of more than 7 weeks' pay.


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 £372.4m, 7.9% to £5.07bn, 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 £1.9m impact relating to a change in the basis of allocation of pension costs to the trading divisions.  Operating profit for the year was £260.6m, down £14.3m, 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. 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 £28.1m (1.0%) to £2.79bn, 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 £157.9m, down £40.5m, or 20.4%.  This includes a £6.4m 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 £34.1m 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 £23.8m 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 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 £25m, an increase of 5.1%, to £518m.

Waitrose invested £293m, mainly on 29 new branches acquired or built in the year and one relocation, together with 13 refurbishments and one extension.

John Lewis invested £182m. 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, £43m 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 £20m, with £8m of this in 2011/12.


In March 2011 the Partnership launched an innovative financing product, the John Lewis Partnership Bond, raising a net £55.3m after costs.  Net debt was £576.9m, up £28.5m (5.2%).  The Partnership balance sheet remains strong.

Net finance costs decreased by £23.6m (37.4%) to £39.5m, mainly because of a net credit of £23.8m in respect of the financing elements of pensions and long service leave, compared to a charge of £2.2m 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 £1.4m (2.3%) to £60.3m.


The total accounting pension deficit at January 2012 increased by £224.1m (54.1%) to £638.1m. Net of deferred tax the deficit was £502.3m.  The accounting valuation of pension fund liabilities increased by £295.0m (10.2%) to £3,175.0m, while pension fund assets increased by £70.9m (2.9%) to £2,536.9m.  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 £124.0m, up £1.1m 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 £10m.  In addition there is approximately £10m 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 £538m, and the exclusion of the fund's investment in JLP Scottish Limited Partnership of £95m 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.

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), and 274 Waitrose supermarkets. The business has annual gross sales of over £8.7bn. 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 per cent 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.(

* 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. is consistently ranked one of the top online shopping destinations in the UK. ( 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

Further information

John Lewis Partnership
Andrew Moys
Director of Communications
Telephone: 07525 272377

Neil Spring
Senior Communications Manager
Telephone: 07890 777464

Citigate Dewe Rogerson

Simon Rigby / Justin Griffiths
Telephone: 020 7638 9571

John Lewis

Helen Dickinson
Head of Communications
Telephone: 07785 952567

Amy Shields
Senior Manager, Corporate, Digital & Branch PR
Telephone: 07525 273077


Christine Watts
Communications Director
Telephone: 07764 676414

John Gregson
Senior PR Manager, Corporate
Telephone: 07525 271618

Gill Smith
Senior Manager, Corporate PR
Telephone: 07887 898133