John Lewis staff dealt bonus blow as profits slump

● Employee payout cut to 5%, lowest since 1954, as 1,400 made redundant

at the John Lewis Partnership will see their bonuses cut for the fifth successive year as the retail giant yesterday revealed a slide in annual profits and 1,400 redundancies.

The department store-towaitrose-supermarkets group said trading conditions were also likely to remain tough in 2018, and that a zero bonus could never be ruled out.

John Lewis Partnership said it was cutting the bonus to 5 per cent of annual salary for the financial year to 27 January, with 85,500 partners sharing out a pot worth £74 million, down from £89.4m the previous year.

The bonus was the lowest since the 4 per cent paid in 1954, and compares with 6 per cent last year and as much as 17 per cent in 2013.

Sir Charlie Mayfield, chairman of the John Lewis Partnership, said: “If the right answer was to have zero bonus, we would have a zero bonus – I’ll be absolutely clear about that. It’s not what we aim to achieve, of course, but what it reflects is the fact that the most important thing for our business is always the long-term future of the partnership... so we will be proactive in ensuring that position.”

He would also not rule out further redundancies as the company faced “no let-up in the intensity of competition”.

Mayfield added that the group company was “expecting the number of partners will continue to decline. That will be a function of the changing use of technology but also longer contracted hours”.

During the year John Lewis department stores’ underlying profits rose 4.5 per cent to £254.2m, as same-floorspace sales edged up 0.4 per cent.

Profits at Waitrose slumped 32 per cent to £172m on likefor-like sales up 0.9 per cent. Underlying group pre-tax profits at the partnership fell 22 per cent to £289m.

Rob Collins, managing director of Waitrose, said the superstaff market group had ploughed £17m into price cuts last year as profit margins were hit by the weakness of sterling, with many cost prices rising three times faster than retail prices.

He cited Scottish salmon cost price up 25 per cent, with Waitrose increasing the retail price of salmon between 0 and 5 per cent, and the cost price of Waitrose butter trebling, while the retail price increase was reined in to 36 per cent.

John Lewis Partnership took a £72.8m hit on its restructuring and redundancy programme, much higher than the £20.7m provision made in the previous financial year.

Mayfield said like-for-like sales at the department stores fell 3.4 per cent in the first five trading weeks of the group’s new financial year, being significantly impacted by the recent heavy snow. “It was good this (the snow) happened in February and not in December.”

John Lewis said it was to open its 50th department store in the UK, at the Westfield shopping mall in west London, later this month and another store in Cheltenham in the autumn.