Innovation and investment drove strong sales and profit performance at John Lewis Partnership (JLP), according to the worker-owned business. The results for the 53 weeks ended 25 January show how the Partnership exceeded £10bn in gross sales, with revenue of £9bn.
Throughout this period, the Partnership, which owns retail businesses John Lewis and Waitrose, opened 13 branches, created 6,300 jobs, and increased the number of partners by 7.4%.
Commenting on the results, Charlie Mayfield, chair of John Lewis Partnership, said: “This has been another good year for the partnership. Both Waitrose and John Lewis increased market share for the fifth consecutive year, profit before exceptional has grown by almost 10% and, for the first time, we have achieved sales of over £10bn.”
Owned by its 91,000 permanent staff members, John Lewis Partnership was ranked second in the UK co-operative 100 index for the 2012 trading year.
Due to the positive performance, the partners will receive a bonus of 15% (£202.5m), which is equivalent to nearly eight weeks’ pay. This is lower than last year’s 17%, which is due to a fall in pre-tax profits by 4% to £329.1m.
“The bonus reflects the balance of a strong trading year, but also the increased costs of pension provision,” said Mr Mayfield.
Mr Mayfield added that the ownership structure played a key role in achieving these results. “There are fundamental changes taking place in retail, especially in customer attitudes towards value, convenience and personalisation. For several years we have been adapting our business to take advantage of these challenges. That has required high levels of investment, organisational change and new capabilities. The level of change has at times been challenging, but partners have understood and embraced the need for their business to continue to develop.”
The Partnership’s emphasis on innovation in product and service resulted in an improvement of their omni-channel offer, with new online platforms for both John Lewis and Waitrose. It has also expanded the “click and collect” service. The Partnership sought to create a greater personalisation of the relationship with customers through schemes like myWaitrose, which offers benefits and discounts to Waitrose customers.
“To deliver all this we continue to make improvements to branch structure and are giving greater emphasis to the importance of our leadership teams creating opportunities for individual partners,” said Charlie Mayfield.
Commenting on the news that John Lewis have awarded 15% bonuses to their staff, Ajay Bhalla, professor of global innovation management at Cass Business School, said: “Readers need to take notice what it means when the John Lewis Partnership announces an annual bonus of 15% for its staff. An employee-owned firm, JLP has consistently demonstrated resilience in both good and difficult economic times. JLP operates in a cutthroat retail industry where it competes against diverse range of firms – such as high street retailers and large supermarkets such as Tesco.”
Prof Bhalla conducted a research study that examines the resilience of employee-owned businesses during the economic crisis. His study, published on 14 January, concludes that although employee-owned businesses are not immune to the financial downturn, they are more able to withstand it, particularly due to the lack of pressure from external shareholders. According to the research, employee-owned businesses are able to develop long-term strategies in partnership with their employees, rather than excluding them.
“So, what drives the success of a firm such as JLP?,” asked Prof Bhalla. “Our research here at Cass shows that the ownership culture of employee-owned businesses, which supports higher employee engagement and links employee initiative-taking to superior performance, is at the heart of success of firms such as John Lewis.”