JOHN Lewis Partnership has seen profits slump by nine per cent as price competition in the grocery market and major investment in its distribution network weighed on its Waitrose business.

However it did not stop staff in the employee-owned business sharing in a £156.2 million bonus. The pot was 11 per cent up on last year and is equal to six weeks' pay on average for its 2,250 staff in Scotland employed by the company for at least a year.

Waitrose has been dragged into the protracted price war in the grocery sector which has seen discounters Lidl and Aldi win share over the established UK supermarkets.

It has responded to price deflation by adding thousands of new products to its everyday Essentials range and expanding rewards available to myWaitrose card holders, which now number 5.4m.

However, operating profits dropped by 24.4 per cent on like for like terms to £237.4 million, before exceptional items. This came as gross sales at Waitrose grew by 6.5 per cent to £6.51bn, and customer numbers growing by six per cent.

The woes at Waitrose, also affected by one-off items including property impairments and onerous leases, offset a 10.4 per cent hike in profits John Lewis department stores.

The division, which includes department stores in Glasgow, Edinburgh and Aberdeen, reported operating profits of £250.5m in the year to the end of January.

It left operating profits across the John Lewis partnership down nine per cent at £342.7m, before exceptional items.

Isabella Miller, who heads the John Lewis department store in Glasgow, said: "From a Waitrose perspective, it has been a very, very competitive market they have been operating in, with deflationary prices as well. Couple that with investment that has been made in both divisions, particularly in IT, to be able to deliver the operational outcomes that we achieve.

"From a John Lewis department store perspective, our branch sales were ahead of last year on a like for like basis, we had great growth again online - it was 21 per cent ahead.

"Overall [it was a] really good, strong, solid performance."

Ms Miller, who joined the Glasgow branch in August, highlighted the growing importance of online sales to the partnership. The click and collect service offered by John Lewis department stores grow by 47 per cent during the year, with 53 per cent of online orders now click and collect transactions.

Orders can be collected in John Lewis and Waitrose shops, and through thousands of neighbourhood shops through the Collect + service.

Meanwhile, Waitrose saw online orders grow by 31.2 per cent, with the average order value rising by five per cent.

Asked to comment on Black Friday, the retail phenomenon imported from the US, Ms Miller said the department stores received a massive boost both sales in store and online over the whole weekend in November. Online sales grew by 300 per cent, she said, adding that sales over Black Friday came from a broader product base than in previous years, which tended to be technology led.

But, noting that there are now two trading peaks to the festive retail season, Ms Miller conceded Black Friday has taken some sales from the Christmas period.

Looking ahead, Ms Miller highlighted investment plans to boost the Waitrose and John Lewis store estates in the coming years. She declined to be drawn on the controversy surrounding plans to extend the Buchanan Galleries shopping centre in Glasgow, where John Lewis is anchor tenant, beyond stating it was working closely with landlord Land Securities on the project.

The plans, which propose the removal of the steps leading up to the Royal Concern Hall, involve the revamp of the John Lewis store.

Plans have also been drawn up to revamp the John Lewis department store in Edinburgh as part of the St James' Centre redevelopment.

On Waitrose, she said work was progressing on the construction of a new store in Milngavie, adding that a new Waitrose is also in the pipeline for Ayr.