John Lewis Partnership could hold back bonus for first time since 1953
By LaToya Harding
THE John Lewis Partnership has warned that its annual staff bonus is under threat for the first time in more than 65 years as it reiterated that fullyear profits would be “substantially lower”.
Despite positive performance over the festive season, the retailer said it needed to consider whether paying a bonus was “prudent” as it deals with challenging trading.
Although the Waitrose owner said it had the “financial strength and flexibility to pay a modest bonus”, it admitted it had been plagued with slower sales growth, tighter margins and higher costs.
“Bonuses are very important, and I am not understating it, but it is just one feature of what we offer [to staff ],” said outgoing chairman Sir Charlie Mayfield.
About 83,000 staff are usually awarded the payout in March; last year the bonus was an extra 5pc of their pay last year.
Withholding the bonus would mark the first suspension since 1953. It was first paid in 1920.
The news came as the John Lewis & Partners department store chain reported a 1pc rise in like-for-like sales across the seven weeks to Jan 5, boosted by a 12.8pc increase in online shopping.
Over the festive season, the fashion house held a longer Black Friday promotion, reporting a very strong week running into Christmas and a record Christmas Eve in its stores. It also highlighted a strong performance in its fashion, beauty and womenswear departments, though margins remained under pressure in an “intensely competitive pricing environment”.
Like-for-like sales at Waitrose grew 0.3pc despite reduced promotional activity.
The supermarket chain launched more than 500 new and improved lines over the period, including own-brand and exclusive festive products.
“We are very much about creating something different,” Waitrose managing director Rob Collins said. “We have turbocharged innovation and are all about value. We are seeing a focus on premium.”
Total sales across the partnership were up 1.4pc over Christmas to £2.2bn.
Sir Charlie tors are affecting the retail sector – oversupply of physical space and relatively weak consumer demand. Despite this, we had a positive Christmas trading period thanks to the extraordinary efforts of partners in our business, delivering differentiated products and service to customers.”
John Lewis’s results came on the same day as a string of trading updates from high-profile names such as Debenhams, Marks and Spencer and Tesco.
According to figures from the British Retail Consortium and KPMG, retailers have suffered their worst December since the recession of 2008.
Simon Underwood of Menzies said: “After the company’s disappointing half-year results, this Christmas trading report will do little to reassure staff and other stakeholders.
“Recent trading performances have shown that no retailer has immunity from the challenging conditions, regardless of whether they are trading online, offline or both.
“To stay profitable in the uncertain times ahead, they must stay focused on cash-flow management, whilst reducing costs and prioritising profitable activities.”
Waitrose owner John Lewis & Partners was hit by slower sales and higher costs‘Trading performances have shown that no retailer has immunity from the challenging conditions, regardless of whether they are online, offline or both’