Within that, Waitrose and Partners operating profit increased 6.8% to £100.8m compared to this time last year. This is largely due to property profits but also improvement in gross margin and strong operational performance, despite a 0.4% decrease in like for like sales which has resulted in a loss of 0.1% market share compared to August 2018. John Lewis and Partners operating loss came in at £34.9million reflecting lower sales in categories with more considered purchasing, cost inflation and higher IT costs.
Some UK retailers have struggled to reach the level of sales achieved last year due to the warmer weather, World Cup and Royal Wedding in summer 2018. In order to try and boost sales, Waitrose launched its largest ever summer food range- Scrumptious Summer which consisted of 200 products.
Debts have reduced by £468.2m year on year due to strong cash generation and tight cash management.
Sir Charlie Mayfield, Partner and Chairman of the John Lewis Partnership, commented:
“As we continue with our strategy to compete through differentiation, not scale, we have maintained investment in Partners and innovation, despite profit pressures, and have seen encouraging results in several areas. In Waitrose and Partners, despite a weak grocery market, we had a good trading performance with only a marginal decline in like-for-like sales, and continued improvement in gross margins. We also saw strong online grocery sales growth of 10.7%, well ahead of the market”.
In April, Mintel’s associate director of retail research, Nick Carroll, said:
“Online grocery is alongside the food discounters, one of the fastest growing segments within the wider grocery sector. However, growth is slowing, and the number of users is plateauing as retailers struggle to encourage new customers to try their service”.
Waitrose Unpacked
In June 2019, Waitrose launched Waitrose Unpacked for a 11 week trial. The unpacked concept included 160 loose fruit and vegetable products, a frozen pick and mix, no plastic packaging on flowers and plants, refillable detergents, washing up liquids wine, beer, coffee and essentials such as pasta, rice, couscous and cereal. The trial received an overwhelming number of positive responses and has since been extended. In addition, parts of the unpacked initiative have been introduced in three more stores.
Sir Charlie Mayfield mentioned:
“Our focus on innovation in areas that matter to our customers and us was demonstrated by our successful trial of Waitrose Unpacked which provides customers with new ways of shopping whilst supporting waste reduction”.
Brexit
Like other retailers, Waitrose and Partners have been preparing for the UK to leave the European Union.
Sir Charlie Mayfield stated:
“Over the next 12 months, we will also accelerate our transformation of the Partnership to deliver innovation faster and increase emphasis on the competitive difference of Partners. However, should the UK leave the EU without a deal, we expect the effect to be significant and it will not be possible to mitigate that impact. In readiness, we have ensured our financial resilience and taken steps to increase our foreign currency hedging, to build stock where that is sensible, and to improve customs readiness. However, Brexit continues to weigh on consumer sentiment at a crucial time for the sector as we enter the peak trading period’”
A recent survey by The Grocer showed that 14% of shoppers are stockpiling food and 61% of shoppers expect there to be some food shortages in the event of a no deal Brexit. For more information click here.
The NFU continue to highlight concerns about the UK leaving the EU with a no-deal. Read the work of the NFU Brexit team here and how a no-deal could impact each farming sector.