Waitrose warns of lower profits but still shows growth

By Erin Smith

Published: 04 August, 2014

Waitrose is following its supermarket brethren Tesco and Morrisons with a lower profit warning, but the upmarket chain still is expecting profits to rise by 4.5%, albeit down on last year's stellar increase.

The profit warning was issued at the end of last week to manage investors' expectations prior to the half yearly results which are expected to be released on September 11, 2014. Operating profits last year increased 13% to £160 million.

Profits were also expected to take a hit as the supermarket chain made some large investments in the first half of the year including 15 new stores and three refurbishments. The company also plans to open up 10 'little Waitrose' convenience shops by the end of 2014. It has also invested in concierge-style desks, which will open at 100 stores throughout this year. Wine tasting is now offered in a few select stores, and online the company launched its digital wine offering with Waitrose Cellar.

The announcement came on the heels of retail analysts Nielsen finding that discount chain Aldi ousted Waitrose to become the sixth-largest retailer in the UK with a 5.2% market share, ahead of Waitros'es 5%.

During the same period Aldi saw sales grow 32% for the 12 weeks to July 20, according to Kantar Worldpanel. Lidl also outperformed the market with sales growth of nearly 20%.

Waitrose is the most recent supermarket chain to see financial performance suffer as low cost grocery chains continue to take market share. Both Tesco and Morrisons have struggled in the past year and both chains have lost market share.

Tesco which reported lower sales for three consecutive quarters saw sales drop by 3.8% according to Kanter. Following the poor results Tesco's chief executive Philip Clarke was ousted. However, despite all the negative press around Tesco's performance it is still holds the lion's share of the market with 28.9.

Morrisons sales fell by 3.8% and its market share was cut from 11.5% down to 11%.

Asda and Sainsbury's have both managed to maintain their market shares of 17% and 16.6% respectively, holding the number two and three spots as far as market share for the supermarket segment.

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