Profits up as investment at John Lewis bears fruit

Directors and partners at John Lewis Partnership celebrated the group's first profits leap for five years.

The retailer, which owns grocery chain Waitrose and is midway through a costly five-year overhaul of its department stores, posted a pre-tax profit rise of 3 per cent to£146 million.

Chairman Sir Stuart Hampson described JLP as a 'long-term player' and said the improvement reflected a 'lot of positive investment coming on stream'.

Department store turnover rose by 6 per cent to£2.3 billion, with like-for-like sales up 4 per cent, as investment in refurbishment, a better product mix and seven-day trading from some shops, paid dividends.

The Christmas and January trading periods were strong, and electricals, cosmetics and fashion accessories sold well. This year, there is likely to be an extension of own-brand merchandise, which delivers better margins.

Department store managing director Luke Mayhew defended the£100 million redevelopment of Peter Jones at Sloane Square. He said the other option had been closure, but now it would be a 'powerful shop' for decades to come.

Waitrose increased its market share, with sales up 5 per cent to£2.4 billion and like-for-like growth of 5 per cent.

E-commerce arm John Lewis Direct is not expected to enter the black for two or three years, but losses were lower than expected.

JLP should benefit from consolidation in either sector. However, Hampson said he was not interested in a major acquisition, but would happily cherry-pick from the spoils.

The retailer will pay staff an annual bonus of 10 per cent of salary.