LONDON (Reuters) - Britain's John Lewis Partnership (JLP.UL) posted a 9 percent fall in underlying profit on Thursday after an industry price war hit its Waitrose supermarket business, forcing it to cut its staff bonus payout for a second straight year.
The 150-year-old employee-owned group, which runs Britain's biggest department store chain as well as its sixth largest supermarket, said Waitrose operating profit slumped 23.4 percent due to brutally competitive market conditions and higher investment costs.
That overshadowed the fact that the group's Waitrose has been winning customers, with total sales for the year up 6.5 percent to 6.51 billion pounds, securing it a record 5.4 percent share according to market research firm Kantar Worldpanel.
The price war in the sector, and deflation in some food categories, resulted in like-for-like sales falling 2.8 percent, excluding petrol, in the first five weeks of the current year, it said.
"We expect the returns for the grocery sector to be materially lower for a period of time," the company said.
As a group it reported profit before tax and exceptional items down 9 percent to 342.7 million pounds.
John Lewis said its 90,000 staff, known as partners, would be paid a bonus of 11 percent of salary, equal to nearly six weeks pay, down from 15 percent last year.
The outlook for its John Lewis department stores in contrast was "robust". Sales at the chain, which has developed a successful online business to complement its stores, rose 9.2 percent to 4.43 billion pounds, and operating profit rose 10.8 percent to 250.5 million pounds, it said.
The department stores business has consistently won market share over the last five years, as its generally more affluent customers avoided the worst of the economic downturn and it has a bias to the more prosperous south east of England.