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Morrisons and John Lewis hike their expansion plans

Supermarket chain Morrisons has promised to ramp up its store rollout programme after reporting hikes in both its turnover and profit for 2009.

Morrisons, the fourth largest grocer in the UK, says it sees “significant opportunities to expand further our store estate”.

It has revealed it will be aiming to add a further 140,000 sq m to its estate in the three years to January 2013.

Meanwhile retail giant John Lewis Partnership - which also reported increased sales and profits when it posted its annual results last week - has renewed its commitment to its growth plans and said it was “continuing to explore possibilities in key city centres in England”.

John Lewis chairman Charlie Mayfield said the company had continued to “invest, innovate and grow, emerging from the recession in a stronger competitive position”.

Both retailers boasted increases in their capital expenditure programmes over the past year. Morrisons increased its expenditure by more than 30 per cent in the 12 months to 31 January - up £228 million to £906m.

The growth was primarily attributed to the group’s purchase of 38 stores from the Co-operative Group at the beginning of the year.

But the group said: “There are still many parts of the country where we are under-represented.

“We estimate that there are some 7 million households in the UK not located within a 15-minute drive time from a Morrisons store - a higher target customer base than any of our three larger competitors. A key part of our strategy, therefore, is to grow the number of Morrisons stores.”

In 2007, the company announced plans to add an additional 93,000 sq m of new space to its estate by January 2010; in its recent results, the company stated that it had exceeded its target by 37,000 sq m.

The expansion included a string of extensions, the refit of 57 new stores and the purchase of the Co-op sites, of which 34 have been rebranded so far. Morrisons said the majority of its newly acquired shops were a smaller format than it had traditionally owned - with many less than 2,000 sq m.

But it said smaller store formats would “form an important element of our ongoing new space acquisition strategy”.
The retailer, which now has a portfolio of 425 stores across the UK, has hailed “another good year” as pre-tax profits climbed from £655m to £858m.

The Bradford-based group - whose new chief executive Dalton Philips, a former executive of US giant Wal-Mart, will take up his post later this month - also saw turnover rise 6 per cent to £15.4 billion.

Meanwhile John Lewis Partnership posted a 20.5 per cent rise in operating profit to £389.7m for the year ending
January 2010.

Group capital expenditure climbed by 9.9 per cent to £444m during the year. Its supermarket division Waitrose - which posted gross sales of £4.5bn, up 9 per cent on 2008 - spent £303m, mainly on 25 new stores acquired or built during the year.

Mr Mayfield said: “Waitrose has made enormous progress in the year with significant investment in… the development of new shops, new formats and strategic partnerships.”

Waitrose’s expansion was boosted by 13 acquisitions from the Co-op and one former Woolworths store.

The company said: “We have already opened two new branches since the year end and plan a further 20 in the year ahead.”

John Lewis invested £112m during the year, primarily on its new stores in Cardiff and Poole, the Magna Park distribution centre in Leicestershire and the refurbishment at Bluewater shopping centre in Kent, which included the fit-out of a new food hall.

The firm, which is co-anchoring Westfield’s Stratford City development, currently under construction adjacent to London’s Olympic Park site, revealed: “The success of the ‘John Lewis at Home’ in Poole, which achieved its sales target for the year three weeks ahead of schedule, means that another ‘at Home’ has been confirmed for Croydon and demonstrates the potential for further expansion.”

John Lewis - which opened its second largest department store at Cardiff’s St David’s 2 in September - said: “We remain committed to our plans for fullline department stores in Sprucefield, in Northern Ireland, and Dublin, and continue to explore possibilities in key city centres in England.”

A further £29m was invested in ITC and the refurbishment of the group’s holiday centres.