John Lewis Part­ner­ship could hold back bonus for first time since 1953

The Daily Telegraph - Business - - Focus On Retail -

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’

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