John Lewis Partnership cuts staff bonus after fall in annual profits

John Lewis Partnership staff outside the John Lewis at home and Waitrose stores in Ipswich following

John Lewis Partnership staff outside the John Lewis at home and Waitrose stores in Ipswich following today's annual bonus announcement . - Credit: Archant

Staff at John Lewis and Waitrose stores have seen their annual bonus cut for the second year running.

The John Lewis Partnership’s 90,000-plus workers, who collectively own the business and a known as “partners” rather than “employees”, will receive a bounus worth 11% of their salary, down from 15% last year and 17% the year before.

The figure was revealed in a series of in-store announcements as the partnership reported pre-tax profits before exceptional items of £342.7million for the 53 weeks to January 31, down 9% on the previous 12 months.

Stripping out the additional week of trading to compare with last year’s 52-week figures, profits were down by 10.5%.

The group said the partnership bonus pool of £156.2m, which will be shared between 93,800 staff, was equivalent to nearly six weeks’ pay.

Results were dragged down by the impact of the supermarket price war on Waitrose, which saw operating profits fall to £237.4m, a 24.4% fall on a comparable 52-week basis, despite a 1.4% rise in like-for-like sales.

Partnership chairman Sir Charlie Mayfield said the supermarket was held back by “the impact of trading in a highly competitive and deflationary market” and warned of more pain to come.

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Waitrose has had a tough start to the new trading year, with like-for-like sales excluding petrol down 2.8% in the first five weeks.

Annual earnings were also hit by investment in IT systems and opening 13 new “core” branches, including eight acquired from the Co-operative, and another 20 convenience shops, as well as other one-off items including property charges.

The high-end retailer has been ramping up promotions as it bids to be more competitive on price in a market where major grocers are battling against the threat of discounters Aldi and Lidl but this is blamed for a hit on its margins.

Sir Charlie 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.”

Department store chain John Lewis saw operating profits increase to £250.5m, a 10.4% improvement on a 52-week basis, as like-for-like sales grew by 6.5%.

The sales performance was reliant on online trading which saw an increase of 21.6% to £1.4billion while like-for-like shop sales growth was just 0.6%. Figures also highlighted the growing popularity of click-and-collect, up 47% on a 52-week basis.

John Lewis saw growth in sales and market share across its fashion, home and electrical and home technology departments. Fashion sales were up 8.3% including a 16.3% growth for nursery and 8.2% for childrenswear.

Sir Charlie said the chain’s outlook was “robust” as it focuses investment on supply chain and systems, which is set to exceed that on new shops and refurbishment for the first time this year. Like-for-like sales for the first five weeks were ahead by 2.6%.

During the year John Lewis opened two “convenience” format stores at London’s St Pancras station and Heathrow Terminal 2. A new regional flagship store is due to open in Birmingham this year.

Gross sales for the John Lewis Partnership for the year were £10.9 billion, including £6.5bn for Waitrose and £4.4bn for John Lewis. The supermarket chain has 336 shops and the department store business 43.

The group also revealed that its net debt had risen by 60.6% to £780.2m after it issued a £300m bond to pay for a one-off pension contribution. It came as the pension deficit swelled by 24.5% to £1.25bn.

The John Lewis Partnership’s presence in Suffolk and north Essex includes John Lewis at Home and Waitrose stores on the Futura Park retail estate in Ipswich, a “Little Waitrose” convenience store in Ipswich town centre and other full-scale Waitrose stores in Bury St Edmunds, Colchester, Newmarket, Saxmundham and Sudbury.

Sabrina Murphy, branch manager at John Lewis at Home in Ipswich, said: “Partners in Ipswich worked tremendously hard to deliver a fantastic year for the branch. We are pleased at how successful our Click and Collect shopping experience has been for our wider assortment.

“Last year saw us celebrate the partnerships’ 150 year anniversary and we worked closely with our community to support charities and local groups, particularly through Community Matters, our community giving scheme.

“I would like to take this opportunity to thank all of our partners for their continued hard work throughout the year and on a thoroughly deserved partner bonus.”