John Lewis slashes bonus to 65-year low on Waitrose fall
Aviva boss promises ‘fun stuff’ ahead with £500m war chest
JOHN Lewis cut its annual bonus payout to staff to just 5% of salary — the lowest for 65 years — after a “challenging” year that saw profits at Waitrose in particular slammed.
Though the department store is still one of the stand-out performers on the High Street, the supermarket arm was buffeted.
Profits at Waitrose for the year to January plunged 42% to £120 million as it cut prices. Sales rose 1.8% to £6.75 billion.
The 5% bonus, £74 million in total, is down from 6% last year and 10% the year before. It has been much higher than that in the recent past, though staff are likely to be supportive of management moves given wider strife in the sector. The bonus is the lowest since 1953, when it was 4%. This is the fifth year running it has been cut.
For chairman Sir Charlie Mayfield, on a basic salary of towards £1 million, the 5% bonus is worth £50,000, though he waived this last year. For shop-floor workers on £25,000, it is £1250. The average pay-out among the 85,000 partners, is £1000.
At John Lewis, sales rose 2.2% to £4.8 billion and profit was steady at £233 million, a performance few other retailers can match. Across the group, profits fell 22% to £289 million.
Mayfield told the Standard: “It was a stand-out performance from John Lewis. We made a clean sweep in terms of winning market share. For Waitrose, we held our position against a tough market backdrop.” He said Waitrose, unlike Tesco and others, still “loses very little trade to Lidl and Aldi”. But he conceded: “The discounters are part of the reason for us not putting prices up.”
The JL Partnership is grappling with a pension deficit of £623 million, though that is £234 million lower than it was a year ago. Mayfield said the company would be “very active” on the pensions scheme.
Like most retailers, last week’s bad weather hit sales. They were 14% lower than a week earlier, though sales of gloves and hats rose.
Mayfield added that the weakness of sterling had increased pressure on profit margins.
@SimonEngStand INSURER Aviva fired up the cash engine today with a pledge to go on a mini-acquisitions spree.
The group signalled plans to spend £500 million on bolt-on deals in markets like Poland and Turkey or buy small start-ups. Shareholders will be given any money that isn’t spent.
Chief executive Mark Wilson said: “We have the very high-quality problem of deploying capital productively. We are now clearly in the growth phase of our business and we are growing faster than, frankly, most would have expected a few years ago. For me, this is where the fun stuff starts.”
It has about £3 billion of spare cash to spend this year and next, and also plans to pay down expensive debt.
Operating profits rose 2% to £3.1 billion but there were problems in Canada where higher claims meant operating profits fell to £46 million from £269 million. The UK, Aviva’s biggest market, saw operating profits soar 13% to £2.2 billion.
Shares fell 2% due to a poorer underwriting performance and woes in Canada.
Aviva exited a string of countries including Spain last year but now says it has finished the pruning job. @bymichaelbow