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John Lewis to launch four new Waitrose stores

JOHN Lewis has revealed it has plans for another four Waitrose stores in Scotland after reporting that strong sales at the high-end grocer and its sister department store chain sent revenues over the £10 billion barrier.

BOOST: Waitrose staff Susan Lang and Mamta Kakaiya celebrate the annual bonus. Picture: Martin Shields
BOOST: Waitrose staff Susan Lang and Mamta Kakaiya celebrate the annual bonus. Picture: Martin Shields

But pensions costs ate into profits and staff bonuses and the employee-owned company has a £1 billion shortfall in its pension fund, it announced.

Profit before tax and staff bonus for the year to January 25 was down 4.1% at £329.1 million after it was hit with a £47.3m charge for correcting a holiday pay blunder and agreed to up its pension scheme contributions.

The company highlighted its underlying pre-tax profits which came in at £376.4m, up 9.6%.

Its pensions costs led the company to cut the annual bonus to 15% from 17% last year.

Chairman Sir Charlie Mayfield said: "This was a good year for the partnership." He added: "It has been hard won and against a backdrop that has been anything but easy. The economy is certainly recovering. But during the course of 2013 what we did not see was any great resurgence in consumer spending."

The group said that both Waitrose and John Lewis had increased market share for a fifth consecutive year. Waitrose took £6.1bn through its tills while John Lewis raked in £4.1bn.

Waitrose said it had reached its highest ever share of 5% of the UK food retail market as it sought to compete more closely on price with the big supermarket chains. This has extended to a pledge to match its rivals in cutting the price of four pints of milk to £1.

The chain plans to open a store in Milngavie, East Dunbartonshire in 2015. Its managing director Mark Price said three more Scottish stores are in the pipeline to add to the six it currently has in locations including Helensburgh, Newton Mearns and Edinburgh.

Waitrose opened a distribution centre in Leyland, Lancashire, in the autumn to aid expansion in northern England and Scotland.

Mr Price dismissed reports that some Waitrose shoppers have complained that its free hot drinks offer for loyalty card holders was attracting the wrong type of customer to its stores.

"It is a storm in a coffee cup," he said.

John Lewis said that like-for-like sales at its department stores, which include outlets in Glasgow, Edinburgh and Aberdeen, had grown by 6.4% over the year.

This included a 2.3% rise in homeware, a category in which John Lewis now clams a 5.2% market share, putting it in second place behind Ikea.

John Lewis managing director Andy Street said: "We are determined to overtake them."

Kim Lowe, head of branch at its Glasgow store, said: "The last few years have presented a challenging commercial landscape for retailers, so I'm proud to report a positive performance for the last year of trading at John Lewis Glasgow."

The group's pension deficit widened by £181.3m or 22.1% to just over £1bn.

It has agreed a new funding deal that saw it put £263m of cash into the pension scheme last year. Staff are included in the non-contributory final salary scheme after three years of service. But the group said last month it is considering moving to a potentially less generous hybrid defined benefit and defined contribution scheme after minimum service of five years.

The reforms will have to be agreed by staff representatives towards the end of the year.

The increased pension payments were behind the reduction in the staff bonus which will total £202.5m, down from £210.8m.

Net debt was up 31% at £486m.

Like-for-like sales at Waitrose were up 3.7% in the first five weeks of the group's new financial year while John Lewis was 5.3% ahead.

Sir Charlie said: "While we have not seen a resurgence in consumer spending, we hope to see that building up steam in the course of this year."

On September's independence vote in Scotland, he said: "We do not really know what might happen if there is a 'yes' vote in the referendum.

"Frankly it is premature for us to give a view on what impact that might have on the business."

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