Investment curbs Waitrose profits, despite sales rise

Waitrose market share is up
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Waitrose has posted an increase in gross sales of 6.5% to £6.51bn in its unaudited results for the 53 weeks ending 31 January 2015. 

Like-for-like sales were up 1.4% with an average of 400,000 more customer transactions a week compared to last year and market share grew to £5.4%.

Operating profit was down 23.4% to £237.4m (down 24.4% on a 52-week basis), held back by “a significantly higher level of investment” in new branches and IT, it was cited. Of the profit decline, Waitrose attributed £26m to the impact of trading in a competitive and deflationary market.

Customer numbers were up 6%, while net debt rose 60.6% to £780.2m following the issue of a £300m bond with net proceeds used for additional one-off pension contributions.

During the period, 13 core supermarkets (including eight acquired from The Co-operative) and 20 convenience shops were opened, online grocery sales rose 31.2%, average order value increased by 5% and myWaitrose membership rose to 5.4 million customers.

Waitrose own-brand grew sales by 5.6% and 4,900 lines were launched or improved in the period.

2015/16 outlook

Sir Charlie Mayfield, chairman of owner John Lewis Partnership, said: “Gross sales after the first five weeks of the current year are up by 1.9% against last year. In grocery, the market remains challenging, with Waitrose’s gross sales up 0.9% (-2.8% like-for-like, excluding petrol).

“We expect the returns for the grocery sector to be materially lower for a period of time. Waitrose’s value perception has improved significantly over the past few years and we will continue to defend that hard-won position during this period of change in the grocery sector.”

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