JOHN LEWIS PARTNERSHIP

John Lewis Partnership

John Lewis Partnership

Introduction

The purpose of this report is to do the financial analysis of a company. For this purpose I have chosen John Lewis Partnership. The John Lewis Partnership is a major United Kingdom worker co-operative retailer which operates John Lewis department stores, Waitrose supermarkets and the direct services company Greenbee (Abbot, 2005). The company is owned by a trust on behalf of all its employees - known as partners - who have a say in the running of the business and receive a share of annual profits, which is usually a significant addition to their salary (Abbot, 2005). The group is the third largest UK private company in the Sunday Times Top Track 100 for 2008 (Abbot, 2005). The chain's image is up market, and it appeals strongly to a middle class core of shoppers.

Background

The John Lewis Partnership is a visionary and successful way of doing business, boldly putting the happiness of Partners at the centre of everything it does (Abdolmohammadi, 2008). It's the embodiment of an ideal, the outcome of nearly a century of endeavour to create a different sort of company, owned by Partners dedicated to serving customers with flair and fairness.

During five years John Lewis Partnership plc and its subsidiary John Lewis plc have small issues of preference stock which have first claim on the profits (Abdolmohammadi, 2008). The whole of the remaining profit is available to be used for the benefit of the business and the Partners. The share of profits allocated to Partners, the Partnership bonus, is fixed each year by the Partnership Board and is distributed as the same percentage of gross annual pay for all Partners (Abdolmohammadi, 2008). All Partners received a 13% bonus for 2008/09 as their share of profits at a total cost of £125m.

Before the exceptional gain on the transfer of the Partnership's interest in Ocado to our pension scheme, profit before Partnership bonus and tax was £279.6m, a decrease of £100.2m, or 26.4%, on last year (Abdolmohammadi, 2008). Including the £127.4m gain on the disposal of our shareholding in Ocado, which is one-off and exceptional in nature, profit before Partnership Bonus and tax was £407.0m, an increase of £27.2m, or 7.2%, on last year.

Profit before Partnership bonus and tax, including the £127.4m gain on the disposal of our shareholding in Ocado, which is one-off and exceptional in nature and was therefore excluded from determining Partnership bonus, was £407m, an increase of £27.2m, or 7.2%, on last year (AICPA, 2008). Operating profit margin decreased from 5.8% to 4.6%. Profit as a percentage of gross sales increased from 5.6% to 5.8%; excluding the exceptional profit on disposal of our shareholding in Ocado, profit as a percentage of gross sales was 4.0%. The store kept the name 'Jessops' until 2002, when after a refurbishment and expansion the store was renamed as simply John Lewis . The partnership has also purchased a number of other regional department stores, as well as developing stores in new ...