Despite nearly tripling its profit, the John Lewis Partnership has decided to forgo its staff bonus for the third consecutive year.
The company, which owns both John Lewis and Waitrose, informed markets that its pre-tax profit surged from £42m to £126m over the 52 weeks to 25 January, as reported by .
Total sales increased by three per cent year on year, rising from £12.4bn to £12.8bn, while the firm's operating profit margin improved by 0.9 percentage points to two per cent.
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John Lewis revealed plans to "step up" its transformation plan this year, supported by a self-funded investment of £600m.
This will encompass "store refurbishments and openings, technology upgrades, and supply chain modernisation."
The company also intends to invest £114m in staff pay. These two investments mean its annual bonus will be scrapped this year-for the third year in a row.
At Waitrose, sales grew 4.4 per cent to £8bn and volumes were up 2.6 per cent. Adjusted operating profit was £227m, up £122m year on year.
Sales at John Lewis remained flat at £4.8bn, while adjusted operating profit was £45m. "These are solid results... we have made good progress," Chair of JLP Jason Tarry said.
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"Looking forward, I see significant opportunity for growth from both our Waitrose and John Lewis brands."
Chairman designate Jason Tarry stated: "Our focus will be on enhancing what makes these brands truly special for our customers. This will involve considerable catch-up investment in our stores and supply chain, underpinned by a strong focus on the core elements of great retail, delivered by our brilliant Partners."
"I am confident with the transformation momentum in the Partnership, we remain well placed to drive further growth in the year ahead and over the longer term," he continued.
Chief Executive Nish Kankiwala, who is set to leave this year after a two-year tenure, commented, "both brands are showing momentum."
Kankiwala also stated, "Tripling our profit is a significant testament to the progress of our transformation – focused on delighting customers while continuing to deliver efficiency improvements, thereby laying the foundations for long-term sustainable growth."
Julie Palmer, partner at Begbies Traynor, called the results "encouraging."
"However, there remains a long road ahead if the retailer is to win back the market share it lost to M&S and other rivals in the battle for Middle England's consumers," she added.
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"New Chair Jason Tarry is certainly sounding the right notes. The opening of new Waitrose stores, the reintroduction of John Lewis' 'Never Knowingly Undersold' guarantee, and an inflation-beating £114m investment into staff pay, should all bode well for the partnership.
"However, the new Chairman may have a tricky task ahead to communicate to his partners why it is important to prioritise investment over a staff bonus once again. Even with the very positive pay rise and profit news this means the Chairman's challenge is far from over."