John Lewis yesterday reported a 20% rise in annual profits, driven by a "stunning" 38% rise in its department stores. There was also a 64% jump in sales at website and catalogue business John Lewis Direct, which is now the group's second-biggest earner behind its flagship Oxford Street store.

The employee-owned department store and Waitrose supermarket group enjoyed "an excellent year", according to outgoing chairman Sir Stuart Hampson, who will be succeeded by Charlie Mayfield in May.

Hampson said the group had made an "encouraging start to what is expected to be a more challenging new trading year".

At John Lewis, five-week sales are currently showing 7% growth, while at Waitrose the increase is 9%, with like-for-like sales up 4%, following last year's impressive 10.3% uplift.

Underlying operating profit before pensions - the figure most watched by analysts - rose 20% to £439.4m in the year to end-January.

John Lewis underlying profits rose 38% after shared service costs, with best-selling products said to be £22 Yves Saint Laurent concealer make-up, 99p energy-saving lightbulbs, and cashmere jumpers in the build-up to Christmas.

Its Scottish stores have frequently starred in the group's performance table over the year.

Waitrose profits were up 5%. Its star lines included "smoothies, rosé wine and venison".

The partnership, owned by its 68,000 permanent staff, operates 183 Waitrose supermarkets and 26 John Lewis department stores including three stores and two supermarkets in Scotland. As well as John Lewis Direct, there is online grocery service Ocado, and financial services arm Greenbee.

Amid mounting interest in the UK retail sector following private equity interest in Sainsbury, Hampson said the company had no plans to change its ownership structure and seek a market listing.

"It's not for discussion, we are a different kind of business. The business is owned in trust for the future generation of partners, it's never been even remotely contemplated," he commented.

However, Hampson was more coy on the future of Ocado, an online supermarket in partnership with Waitrose which lost £45m in 2005.

"That's something that you should really ask Ocado all about, rather than me," Hampson said in response to a question. John Lewis holds a 30% stake in Ocado and booked a profit on its shareholding of £18m, up from £11m last year.

Hampson said John Lewis Direct was now "a well-established, integral and profitable part of our business".

There are plans to open 20 John Lewis stores and 20 Waitroses in the next 10 years, including branches in Stratford in east London, in time for the Olympics in 2012.

Profit retained for development and tax rose 25% to £164m.

John Lewis declared a £155.2m bonus, which will be distributed among staff, or "partners" as they are called, equating to more than nine weeks' pay.