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John Lewis pension costs lead to profits dip at Waitrose

Published:  05 July, 2016

Waitrose has seen its pre-tax profits take a dive thanks to pension costs associated with parent firm John Lewis.

The upmarket multiple reported a 17% slide in pre-tax profits for the year to January 2016, sliding to £66.6m from £80.6m the previous year.

According to figures posted to Companies House, sales also fell to £5.9bn from £6bn a year earlier while like-for-like sales were down by 1.3%.

In its full accounts made up to January 30, 2016, filed to Companies House, Waitrose's pension costs added up to £95.2m compared with £90.4m in 2015.

Along with increased financial pressure from its pension scheme, Waitrose said it was operating, "against a backdrop of exceptionally tough market conditions and continuing food price deflation".

Like the big four supermarkets, Waitrose has faced fierce competition from discount retailers Aldi and Lidl, which last month hit a record high of 10.5% in combined market share.

Waitrose is seeing growth with its premium Waitrose 1 brand, however.

Figures released by Kantar Worldpanel, showed that small but rapidly increasing sales of the 1 range have helped contributed to 1.3% growth in the 12 weeks to June 19.

New retail director Rob Collins is now said to be accelerating a "Modern Waitrose" strategy which will focus on adapting to changing shopping patterns by adding wine bars, bakeries and sushi bars to lure shoppers to their stores.

The grocery chain's annual bonus, shared between 58,970 staff, was cut from £87 million to £80 million as a result of the slide in profits.

Waitrose could possibly be one of the retail winners out of Britain's decision to leave the EU as it exports products to 58 countries around the world, and only four of these are within the EU.