LONDON (Reuters) - British retailer John Lewis JLP.UL expects to grow market share for a fifth straight year as its generally more affluent customers shield it from a recession-hit economy that has weakened many rivals.
The employee-owned group cautioned, however, that sales were likely to rise more slowly than the 9.3 percent achieved in its 2012-2013 financial year, if only because it was hard to deliver growth at such a rapid rate from one year to the next.
“We expect our sales growth to continue this year, albeit less strongly than in 2012-13,” Charlie Mayfield, chairman of the group which runs Britain’s biggest department store chain and upmarket grocer Waitrose, said on Thursday.
“We see this as a time of opportunity in a market which we think will continue to be growing slowly and is probably looking slightly better than it was a year ago,” he told reporters.
Mayfield was speaking after John Lewis posted a 16 percent rise in annual profit and said it would pay its 84,700 staff, known as partners, a bonus of 17 percent of salary, equal to nine weeks pay, up from 14 percent last year when the bonus was cut for the first time since 2009.
With Britain teetering on the brink of a third recession in four years, many retailers have been finding the going tough as consumers fret over job security, a squeeze on incomes and government cuts. Debenhams (DEB.L), Britain’s No. 2 department store group, issued a profit warning on Monday.
But the 149-year-old John Lewis, whose worker co-ownership business model has been lauded by Prime Minister David Cameron, has consistently bucked the gloom, winning market share over the last four years.
Its more affluent customers have been less impacted by the economic downturn, while improvements to stores, products, service, promotions and marketing, including its sponsorship of the London Olympic Games, have chimed with shoppers.
Mayfield said Britain’s coalition government should stick to its focus on debt reduction.
“The government’s got to get public finances in order and should persist with that,” he said.
“That’s key to creating the confidence for businesses to invest and so too is having good infrastructure literally on which to build it.”
Profit before tax and a staff bonus pool of 210.8 million pounds rose to 409.6 million pounds in the year to January 26, up from 354 million pounds last year.
John Lewis, the only major British retailer to publish weekly sales figures, said total sales increased 9.3 percent to 9.54 billion pounds, reflecting booming electricals and online sales and a record performance at Christmas.
Retail market researcher Conlumino said John Lewis’ partnership structure was helping it outperform rivals.
“It acts as both a motivator for staff and as a facilitator for long range decision making,” it said.
Operating profit at John Lewis’ chain of 39 department stores rose 37.2 percent to 216.7 million pounds, on sales up 13.5 percent.
“We’re still expecting to grow share but I would be happy with a high single figure (sales growth) number rather than that sort of unprecedented score,” said Andy Street, managing director of the department stores business.
A quarter of John Lewis’ department store sales are now made online, a figure Street reckons will eventually hit 40 percent.
At the 290-store Waitrose, operating profit was up 12.2 percent to 292.3 million pounds, on sales up 6.7 percent.
Waitrose managing director Mark Price said sales growth in 2013-14 of just over 7 percent “would be a good outcome”.
After five weeks of its new financial year group sales were 10.5 percent higher, with department store sales up 16 percent and Waitrose sales 8.1 percent higher.
The group will step up investment this year. It plans capital spending in excess of 500 million pounds, with a focus on the supply chain, technology and systems.
($1 = 0.6643 British pounds)
Reporting by James Davey; Editing by Kate Holton and Mark Potter