Waitrose hit by 24 drop in profits

Waitrose has become the latest to feel the sting of the supermarket price war.

The UK's sixth largest supermarket has announced a 24.4 per cent drop in operating profit for 2014 despite posting a 4.7 per cent increase in revenue, compared to the previous year. The fall has been down to a slashing of prices to keep up with rivals and new competitors such as discounters Aldi and Lidl.

As Waitrose stuttered, its parent company John Lewis Partnership fared better with a 10.4 per cent rise in operating profit to £442.3 million in 2014. Like-for-like sales at Waitrose had grown by 1.4 per cent in the year to January 31st but with a fall in operating profits meant that it had depressed the figures posted by the whole organisation.

Sir Charlie Mayfield, chairman of John Lewis Partnership, said: "We expect the returns for the grocery sector to be materially lower for a period of time.

"Waitrose's value perception has improved significantly over the last few years and we will continue to defend that hard won position during this period of change in the grocery sector."

Turn in fortunes

Waitrose's latest financial report is a far cry from the positivity following the busy Christmas period. The supermarket was one of very few that posted an increase in sales during the festive months. In the five weeks to January 3rd, Waitrose recorded a 2.8 per cent uptake in like-for-like sales but this latest announcement pales this relatively positive figure into insignificance.

It has now become embroiled in a fierce price war that is affecting supermarkets across the UK. With pressure from Aldi and Lidl, supermarkets are struggling to claw back their customer base. Waitrose's announcement comes after Morrisons revealed its worst result in eight years with a drop of 52 per cent in pre-tax profits.