John Lewis staff pay for 77% profit plunge
JOHN Lewis has cut its staff bonus to the lowest level since 1954 as its department stores and Waitrose supermarkets prepare for more “intense” competition after annual profit fell by 77 per cent.
The 85,500 partners who co-own the business will share a pot of £74million, down from £89.4million the previous year. It is the fifth successive reduction and at 5 per cent of annual pay the bonus equivalent represents a 64-year low.
Chairman Sir Charlie Mayfield said it would consider reducing the bonus to zero – last seen in 1953 – to protect the long-term health of the business. He warned jobs would continue to be shed after 1,400 redundancies last year to reflect technological change and longer contracted hours for staff, who would be in better jobs providing more value.
Mayfield, pictured, said: “The extent to which technology is going to affect the workplace isn’t being factored in at the moment. We are looking at a level of displacement and disruption, which is greater than what we have seen.
“We are not expecting any let-up in competitive intensity and pressure on profits. This is absolutely no time for a defensive crouch. Our whole game plan is to step up to these challenges and we will step up innovation. It is the only way to win in these markets. Our level of investment is about 20 per cent higher than our competitors. We all feel pretty excited about the plans for the year ahead.” John Lewis’s underlying profit fell by 21.9 per cent to £289.2million but pre-tax profit was 77 per cent lower at £103.9million after exceptional charges including restructuring and redundancy costs. Gross sales were up by 2 per cent to £11.6billion.
Waitrose operating profit before bonus and exceptional items was down nearly a third to £172million as it absorbed higher costs while trying to keep prices low for customers. Department stores profit rose 4.5 per cent to £254.2million, boosted by strong fashion sales including 14.9 per cent growth in own-brand womenswear.