Holiday pay blunder dents John Lewis profits

A sharp rise in sales at Waitrose helps John Lewis post better than expected first-half profits, but holiday pay charge hits profits.

by Elizabeth Anderson
Last Updated: 04 Nov 2014
The John Lewis Partnership, which owns the Waitrose supermarket chain as well as the eponymous John Lewis department stores, said that underlying pre-tax profit in the six months to July 27 rose 3.9% to £115.8m, while group revenue climbed 7.5% to £4.2bn.

However, net profits were down 38.5% when taking into account an exceptional charge of £47.3m following a review of holiday pay policy. Last month, the John Lewis Partnership revealed it had underpaid 69,000 workers over a seven-year period, a costly oversight which cost the department store an estimated £40m.

Despite this one-off charge, the employee-owned partnership is optimistic about its long-term performance. In the first six weeks of the second half of its financial year, sales rose 5.1% on a like-for-like basis, while Waitrose was up 4.4%.

‘The Partnership has had a strong first half ... slightly ahead of our expectations due to a good trading performance in both businesses,’ said Charlie Mayfield, Chairman of John Lewis Partnership, which has 39 John Lewis shops and almost 300 Waitrose supermarkets.

Some 800 new jobs were created in the first six months of the year, taking the total headcount to 85,000. Waitrose is also gaining market share in the competitive supermarket sector.

‘Waitrose has outperformed the market for over four years and our market share now stands at 4.9 per cent, 0.3 per cent higher than a year ago,’ the company said. It plans to open six new branches and three convenience stores in the next six months.

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