JLP profits decline despite positive sales for Waitrose

Date : 12 March 2021

Lucy Ingram

Retail Analyst

The JLP's results for the 53 weeks ending January 2021 show the business continues to see mixed performance between its brands, with Waitrose seeing strong growth and John Lewis struggling. 

Partnership: decline in profits 

  • Partnership total trading sales: £12,317m (2019/20 £11,747m) +5%
  • Partnership pre-tax loss: -£517m
  • Partners received no bonus payment

The results show a similar pattern to FY19, where the JLP's profit before tax declined 23.1%. In 2020 John Lewis was significantly impacted by the pandemic, with stores forced to close throughout the lockdown periods due to being deemed non-essential.

Waitrose: strong like-for-like growth

  • Waitrose total trading sales: £7,595m (2019/20 £6,917) +10%
  • Waitrose like-for-like sales: +10%
  • Trading operating profit: £1,145m (2019/20 £1,063m) +8%
  • Online grocery: +182%

Growth was driven by the impact of the pandemic, with the closure of hospitality, and sustained online growth. The rise in demand for ecommerce has had a mixed impact on the retailer. Although it has significantly added to sales, the higher cost to fulfil orders has led to a dilution of profit margins.

In line with the rest of the market, Waitrose shoppers condensed their shopping into fewer visits, with bigger shops and fewer top up shops.

Online: £1bn sales

Source: JLP

At the start of the financial year, online accounted for 5% of Waitrose's sales, it is now 20%. It now stands as a £1bn sales business. The retailer is now processing around 240,000 orders a week, compared to 60,000 pre-pandemic. This expansion was supported by the opening of a new customer fulfilment centre and the extension of online picking and delivery, which is now available in 260 of 331 Waitrose stores. Click & Collect is now available at over 900 locations, up from 458 last year. A trial partnership with Deliveroo is now available in 40 stores and has also helped the retailer attract new younger shoppers. According to Kantar these developments have made Waitrose.com the fastest growing online retailer.

2021: continued investment into online

The priority investments for 2021 are focused on improving the retailer's online capabilities;

  • Improving digital capability for Waitrose.com.
  • Developing the new customer Waitrose fulfilment centre in London, which opened in early March
  • Continued investment in the automation of distribution centres, to increase capacity and improve ecommerce efficiency
  • Stronger sustainability with further reductions in plastics in Waitrose and the expansion of Unpacked

Waitrose will also continue to invest in its store estate, trialling the introduction of John Lewis shopping areas in stores. It is currently trialling this in Godalming, Horley, Wallingford, Lincoln and Lymington and has reported positive performance. If successful, the shop-in-shop areas will be rolled out to 331 Waitrose stores.

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