John Lewis bonuses axed as losses surge
A ‘HURRICANE’ of inflation swept away sales and staff bonuses at John Lewis and Waitrose as Britain struggled with rising living costs.
The retail giant crashed to a loss of £234m last year as sales at Waitrose fell 3pc while revenues at the department store chain were up just 0.2pc.
Overall, it left sales across the John Lewis Partnership down 2pc to £12.25bn in the 12 months to January 28.
It is not paying its annual bonus to its 74,000 staff – who are known as ‘partners’ and effectively own the business – for only the second time since 1953. And it will have to axe staff as customers cut back on the ‘ nice to have’ products that are a feature of its brand.
Chairman Dame Sharon White ( pictured) warned of cost cuts, saying: ‘ As we need to become more efficient and productive, that will have an impact on our number of partners. That’s a massive regret to me.’
The loss of £234m, compared to a loss of £27m in the year before, was largely driven by a writedown of the value of its stores.
Taking these out of the equation, the loss before exceptional items and tax was £78m, compared to a £181m profit the year before. In a letter to staff, White apologised for the lack of a bonus after a ‘tough set of results’.
She said: ‘You’ve been exceptional in what has been another very tough year. Two years of pandemic and now a cost of living crisis. Inflation has had a big impact on the partnership and sent our costs soaring, up almost £180m on last year.’
John Lewis has appointed Nish Kankiwala, a former Hovis and Burger King executive, as the first chief executive to help turn around its fortunes.
Waitrose sales fell 3pc to £7.31bn while John Lewis sales rose by just 0.2pc to £4.9bn. However, er, given an inflation rate of over ver 10pc this represents a disappointing apat number.
Head of money and markets at Hargreaves Lansdown, Susannah ah Streeter, said: ‘The cost of living ng crisis has been blowing a chill hill wind through the retail sector tor but has whipped up a hurricane ane of problems for John Lewis.
‘Although the High Street has shown pockets of resilience ce among retailers offering valuefor-money uetowis’ essentials, the nice-tohave items which are John Lewis’ bread and butter have been dropping open out of shopping baskets.
‘Waitrose, in particular, has been sideswiped by the trend. Shoppers opin have been putting less in their trollies and decamping to o cheaper stores.’
Senior consultant at Retail Economics, Josh Holmes, said: ‘These results are worse than expected, with both Waitrose and John Lewis seeing profits retrench as inflation sends costs spiralling.
‘The retailer must ensure that it doesn’t lose sight of what made them great in the first place – quality, customer service, and an aspirational brand image. Putting cost-cutting at the forefront of the company agenda could undermine these values and risks losing further ground to competitors.’