John Lewis restores staff bonus but warns of price hike over rising costs

The John Lewis Partnership has restored its annual bonus and unveiled a pay rise for its workforce of nearly 80,000 but warned of price hikes amid "significant" cost pressures.

Staff at the retail giant, which also owns upmarket supermarket chain Waitrose, will share a £46 million bonus after underlying annual profits rebound by 38 per cent.

The group will pay a bonus of 3 per cent - or one-and-a-half weeks' wages - to its employees in April and raise salaries by 2 per cent on top of its pledge to pay the real living wage as it acknowledged the squeeze from the cost of living crisis.

It marks the return of the bonus which was scrapped last year for the first time since 1953.

The group reported underlying pre-tax profits rising to £181 million in the year to January 29 thanks to a record £4.9 billion sales at the department stores, up 8 per cent on a likefor-like basis.

Chairwoman Dame Sharon White hailed a "good start" to the group's five-year overhaul, but warned of uncertainties amid the Ukraine conflict and rising inflation, with prices having to increase in some areas.

She said the group is facing "significant persistent pressures" on costs.

She said: "As far as we can, we're trying to absorb the cost pressures... not all of these pressures are absorbable."

"The cost of living pressures are real - real for our partners and customers and we're doing everything we can in our power to try to limit the impact."

Results were also buoyed by the John Lewis Partnership slashing costs by £170m, closing a raft of stores and cutting jobs.

It remained in the red on a bottom-line basis, though losses narrowed sharply to £26m from £517m the previous year, when it posted its first annual loss after the pandemic battered outlets.

While the John Lewis department store saw profits rise by 37percentto£758m,waitrose earnings dropped by 11 per cent to £1bn as it faced surging costs within supply chains due to staff absences in the pandemic and higher online trade.

Waitrose chief James Bailey said the supermarket brand was witnessing inflation of between 3 per cent and 3.5 per cent across its stock.

He said the business had made "small price increases" in some areas but had also swallowed cost increases in an effort to support customers amid the cost of living crisis.

In July, the employeeowned business revealed plans to cut 1,000 jobs, having already said it would axe around 1,465 roles as part of last year's store closures.

The group recently ditched its "Never Knowingly Undersold" promise to customers to focus on its Anyday value ranges instead.

It has also said it will remove any products made in Russia from Waitrose and John Lewis in response to the conflict, including Russian vodka, some barbecue products and some duvets.

Richard Lim, chief executive officer of Retail Economics, said: "Significant obstacles face the business. The shock to living standards will reverberate far and wide as consumers cut back discretionary purchases and trade down to cheaper alternatives.”