Sales at supermarket chain Waitrose broke through the £4bn sales barrier for the first time in 2008, even though like-for-like sales only grew by 0.4% in the year to 31 January 2009.
Charlie Mayfield, chairman of John Lewis Partnership, said sales in Waitrose increased by £206m (up 5.2%), while operating profit, before property gains, fell by £7.4m, or 3.4%, to £211.6m. These results, he said, reflected “our determination to invest in retaining our customers and growing our presence”. After property gains, operating profit fell £13m, or 5.7%, to £214.6m.
“We invested heavily in price, with over £30m in price reductions and 8,400 promotions, an increase of 25% on the prior year,” he said. “Our investment in price was greater, in proportion to our size, than our competitors. We also communicated these changes more clearly and directly, showing competitors’ prices in store for the first time.
“We invested in product quality and innovation with £9m spent on product development, and we re-introduced ‘Forgotten Cuts’ – a range of lesser known, economical cuts of meat such as ox cheeks, beef skirt and lamb shoulder shanks. Waitrose only stocks 100% British fresh pork and last year we maintained our long-term support for UK agriculture by becoming the first major retailer to source 100% of our bacon from Britain. The customer response was encouraging with an increase in our primary shoppers,” he said.
“Strong control over our variable costs, which fell by 10 basis points as a percentage of sales, was achieved by focusing on efficiency but at the same time we continued to invest in service, stretching our lead over our competitors. These savings were offset by an increase in overheads, primarily £6m of higher utility costs, driven by external market forces.
“We continued to grow strongly with 11 new stores in the UK in 2008, including two new market town shops and our first new convenience shop format. We also converted an existing branch to become a third market town shop. We opened two Waitrose shops in Dubai under a licensing agreement with Finefare Food Market.
“Our online service Waitrose Deliver,” he said, “is now available in 94 branches, growing in parallel with Ocado, with whom Waitrose has a supply relationship. Our buying alliance with Booths, announced in September 2008, will allow us to build economies of scale and boost profitability in the long term.
“In 2009 we plan to open a further 22 shops (eight new and 14 acquired branches), employ 4,000 new partners and extend three existing stores. This will take our estate to 220 stores in the UK and, with further investment in our price commitment and the launch of ‘Essential Waitrose’, we will continue to improve value for customers through 2009,” said Mayfield.
