8th Mar 2007 09:35
Lewis(John) PLC08 March 2007 Unaudited results for year to 27 January 2007(This does not constitute a preliminary announcement)Strict Stock Exchange Embargo 9.30amThursday 8 March 2007 John Lewis Partnership Results for the year ended 27 January 2007 "Backing ambition with performance" • Group sales up 11%, £614m to £6.4bn • Operating profit up 26%, £73m to £354m • Profit before tax up 27%, £67m to £319m • Partnership Bonus payment of £155m; up £35m (increase of 29%); 18% of salary (equal to more than 9 weeks' pay) • Return on Capital of 7.9% • Net cash from operations now over £500m (increase of over 20%) • Group sales for 5 weeks to 3 March up 8% John Lewis • Sales up 11%, £257m to £2.7bn • Profits* up 38%, £72m to £264m • Like-for-like sales up 10.3% • John Lewis Direct sales up £72m (up 64%) to £185m • Net operating margin up 2.1% to 6.0% Waitrose • Sales up 11%, £357m to £3.7bn, reflecting LFL sales growth • Profits* up 5%, £13m to £244m • Like-for-like growth of 5.3% • Market share up 0.2% to 3.9% • Net operating margin broadly level with last year at 4.3% * Divisional profits are stated before corporate and shared services costs. Sir Stuart Hampson, Chairman of John Lewis Partnership, commented: "The Partnership has had an excellent year and I'm very pleased to be reportingsuch strong financial results in my final announcement. It's the engagement ofour Partners in all aspects of the business that is the foundation of oursuccess. I have every confidence that we have the capability at every level to continueto power the Partnership and realise our ambitions for the future. Profits stride forward The Partnership has been widely recognised as the retail pace-setter over thelast year, and I'm pleased to report that this has been borne out by anexcellent set of financial results and a major stride forward in thePartnership's profits. Consistently strong trading throughout 2006/07 saw sales increase by 11%, £614m,to £6.4bn, and good cost management translated this into a final figure forprofit before tax of £319m - an increase of 27% on last year. For the second year running we've been able to match these powerful financialresults with two impressive votes of confidence from shoppers, as the Verdictand Which? customer surveys again rated John Lewis and Waitrose as the UK's twofavourite retailers. Last week we were also voted Retailer of the Year by aRetail Week panel of our High Street competitors. It's through the power of Partners working together that we've been able to keepup this pace and make so many improvements in every part of the business, and Icongratulate all our Partners on this fine performance. The Board has decided that £155m should be distributed as Partnership Bonus at arate of 18%. This, together with the £85m charge for our pension fund and otherPartner benefits of around £60m (discount in the shops, dining room subsidy,residential clubs and leisure activities), brings the total sum shared byPartners this year to some £300m. These results show how our Partnership model can provide the profitability tocreate a sustainable and ambitiously expanding business, can win the approvaland loyalty of our customers and can reward the achievement of our Partnersthrough provision for a good pension in retirement and a Bonus worth over 9weeks' pay. John Lewis John Lewis has had a simply stunning year, with retail sales up by £258m, 11%,to £2.7bn and most categories gaining market share. The star performer is againElectrical and Home Technology, which achieved sales growth of almost 25%, butthere were also excellent performances in the homeware and clothingdirectorates. There were no new branch openings this year and like-for-likesales growth was more than 10%. All branches played a part in the year-on-yearimprovement, with particularly strong growth from Solihull, Edinburgh, PeterJones and Southampton. Our sales performance was mainly driven by the substantial investments we havemade over recent years in line with a clear strategic direction, together withsignificant operational improvements in 2006. These included call-centreproductivity gains, better stock availability and supply chain efficiency andimprovements to our delivery proposition. Further margin improvements were secured over the year, and in the branchesoperating costs were well controlled, compensating for a £4m increase in thedivision's utility costs. John Lewis Direct achieved a 64% increase in sales, and it's now a wellestablished, integral and profitable part of our business. Despite the large number of initiatives and projects underway and the growth intrade this year, central divisional costs were held to last year's level, withpay increases and other inflation covered by savings elsewhere. Following significant restructuring within the manufacturing operations, theyhave managed, despite a £1m, 7%, fall in external sales, to generate a small netprofit of £1m, compared with a loss of £6m last year. Property profits amounted to £9m compared with £2m last year, with most of thisyear's gain relating to the disposal of Caleys in August. Divisional profit has increased by £72m, 38%, from £192m to £264m, anoutstanding result. Waitrose It's been another year of successful growth for Waitrose with branches beingacquired from both Somerfield and Morrisons, including two in Scotland, and theadditional purchase of a new distribution centre at Aylesford. At the end of theyear we had 183 branches compared with 173 in January 2006. The last three yearshave seen a net increase of 40 branches and 43% in selling space. The maturingeffect of this investment will continue to accelerate our sales line for sometime to come as new customers test out our offer and like what they find. Sales for Waitrose rose by £357m, 11%, to £3.7bn, fuelled significantly bylike-for-like sales growth in excess of 5% - ahead of the overall marketperformance of 4% and a credit both to the standards of presentation andcustomer service achieved in our shops and also to the ongoing innovation anddiligence in our buying teams. We again achieved recognition for thesesuccesses, gaining a large number of prestigious awards for our customerservice, our food and wine and for our sourcing policies. Alongside this core growth we benefited from maturing sales at the ex-Safewaybranches acquired in 2004 and 2005 and from acquisitions and relocations duringthe year at Biggin Hill, Balham, Barbican, Buxton, Comely Bank, Morningside,Southampton, Formby, Eastbourne, Parkstone, Hexham and Lymington. We alsodeveloped new branches at Bloomsbury and Ampthill. The performance of our newshops has been a very positive sign of the customer appeal of the Waitrose offerin all parts of England and for the first time in Scotland. Our greater scale continued to deliver advantages in buying terms and in centralcosts, and the information provided by our new stock system combined withexcellent stock management in the branches delivered a significant reduction inwastage costs. Property profits of £3m were realised, compared with £2m lastyear. The level of change in the business drove some significant additionalcosts, including reorganisation costs of £7m and an increase of £10m inutilities, largely driven by the doubling of electricity rates in October 2005. Overall divisional profit increased by £13m, 5%, to £244m - a strong result andone in which all Waitrose Partners can take great pride. Pensions Our pension charge for the year is broadly level with last year's at £85m. Thefund's investment assets have performed very well, increasing to just under£1.8bn and delivering a return of 13.6%, well ahead of the market benchmark of10.5%. Ocado Ocado has continued to grow its sales and develop its business during the year.It had a good Christmas, with sales up 60% in the final week.We have recorded a book profit on our shareholding in Ocado of £18m, comparedwith £11m last year, reflecting the fund-raising early in the year. This gain isentirely offset by our share of Ocado's trading losses, £9.5m for this year and£8.5m brought forward from last year. Capital expenditure Capital spending in 2006/07 is in the order of £393m compared with £288m in theprevious year - of which £105m relates to new stores acquired by Waitrose. Thisdemonstrates the significant investments we are making to expand and develop thePartnership. We nonetheless managed to reduce our net debt by £16m to £310m dueto the strong sales performance and tighter management of our cash and assets,in particular as a result of both divisions reducing their working capital by atotal of some £66m. The Partnership generated over £500m in operating cash flowfor the year. Partnership Bonus We have more Partners in the business now, particularly in Waitrose, and this,together with higher pay rates, has moved the cost of each 1% of Bonus 7.5%higher. The Board's decision on the bonus raises the total distributed to £155m.Partners will have received by now full information on our new BonusSave scheme,and I hope that this level of Bonus will enable many Partners to take up theoption to invest some of it tax-efficiently. Outlook for 2007/08 Both divisions have made an encouraging start to what is expected to be a morechallenging new trading year. At John Lewis five week sales are currentlyshowing 7% growth, while at Waitrose the increase is 9%, with like-for-likesales continuing to advance by 4%. We've an ambitious development programme for the year, with John Lewis OxfordStreet completing its major refurbishment, Cambridge targeting an opening intime for Christmas trading, a pressing pace of openings scheduled for 2008 inLiverpool and Leicester, and progressively greater physical evidence of thebranches which will follow on after that. Waitrose will add three new branchesin Cheadle Hulme, Windsor and Rickmansworth, with major extensions beingcompleted in Maidenhead, and John Barnes and numerous other extension andrefurbishment projects. Greenbee is poised to add life cover to its range ofproducts from April, with other new services in prospect. All this is evidenceof the progress towards the doubling in size of our business in the next tenyears which is now embedded in our Business Plan. No-one can say the Partnership is lacking ambition at present. This year'sresults show that we're backing ambition with performance. As I sign off thisfinal profit announcement of my Chairmanship, I'm delighted to see the talent,energy and commitment at every level of our business which will enable us tocontinue to show the power of Partnership." For further information: John Lewis PartnershipSusan Donovan, Director of Communications 020 7592 6292 Citigate Dewe RogersonSimon Rigby 020 7282 2847George Cazenove 020 7282 2870 John LewisHelen Dickinson, Head of Press and PR 020 7592 6274Louise Thomson, Press and Public Relations Manager, Corporate 020 7592 6223 WaitroseGill Smith, PR Manager, Corporate 07887 898133 Notes to editors The John Lewis Partnership - The John Lewis Partnership operates 26 departmentstores across the UK, John Lewis Direct - a website and catalogue business, 183Waitrose supermarkets and Greenbee, a new direct services company. The businesshas an annual turnover of almost £6bn. It is the country's largest example ofworker co-ownership where all 68,000 staff are Partners in the business. (www.johnlewispartnership.co.uk) John Lewis - John Lewis, 'Britain's favourite retailer 2007'*, typically stocksmore than 350,000 separate lines. The website stocks 25,000 lines focused on thebest of home and giftware and is consistently ranked one of the top onlineshopping destinations in the UK. (www.johnlewis.com) Waitrose - Waitrose, named 'Britain's favourite supermarket'*, combines theconvenience of a supermarket with the expertise and service of a specialistshop. It offers fresh and frozen foods, wines and groceries as well asdelicatessen, cheese, fresh fish, meat, patisserie and hot-food counters.Waitrose is dedicated to offering quality food that has been responsibly sourcedcombined with high standards of customer service. (www.waitrose.com) Greenbee - In October 2006 the Partnership launched Greenbee, a new directservices company which offers a carefully edited range of financial, travel andleisure services with the same levels of integrity, quality, value and servicethat customers have come to expect from Waitrose and John Lewis. (www.greenbee.com)*Which? customer satisfaction survey, February 2007. UNAUDITED RESULTS FOR THE YEAR TO 27 JANUARY 2007 =========================== ======== ======== ==== ======= = 2006/07 2005/06 Change SALES £m £m % ---- ---- --- --- John Lewis 2,679.7 2,422.9 11Waitrose 3,698.5 3,341.5 11--------------------------- -------- -------- ---------Total Gross Sales 6,378.2 5,764.4 11Adjustment for sale or return sales (100.7) (92.8)Value added tax (579.3) (522.3)--------------------------- -------- -------- ---------Revenue 5,698.2 5,149.3 11--------------------------- -------- -------- --------- PROFITS John Lewis 263.5 191.6 38Waitrose 243.7 231.1 5 -------- -------- ---------Total divisional profit 507.2 422.7 20Corporate and shared services (67.8) (55.6) (22) -------- -------- ---------Operating profit before pensions 439.4 367.1 20Pension costs (85.1) (85.5) ---------------------------- -------- -------- ---------Operating profit 354.3 281.6 26--------------------------- -------- -------- --------- Net financing costs (35.1) (35.0)Associate company (Ocado) - 5.2--------------------------- -------- -------- ---------Profit before Partnership bonus & 319.2 251.8 27taxationPartnership bonus (155.2) (120.3) 29--------------------------- -------- -------- ---------Profit retained for development & 164.0 131.5 25taxation -------- -------- ------------------------------------ Note: This does not constitute a preliminary announcement.These results are subject to audit. The audited results for2006/07 will be announced in April. =========================== ======== ======== ==== ========= This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
Comw.bk.a.25