John Lewis restores bonus as annual losses narrow

The John Lewis Partnership will resume paying its employee bonus after cutting annual losses.
The employee-owned retailer, which also owns supermarket chain Waitrose, reported revenues of £10.84bn in the year to 29 January, up on the previous year’s £10.77bn.

Profits before bonus, tax and exceptional items was £181m, a 38% hike on the previous year, while operating profits were £119m, compared to last year’s losses of £360m. The pre-tax loss narrowed to £26m from £517m.

As a result, a bonus of 3% will be paid to all partners from a pot of £46m, which John Lewis said was the equivalent of 1.5 weeks’ pay. The executive team including chair Sharon White will donate theirs to the British Red Cross.

The department stores saw sales rise 4% to £4.9bn, or 8% on an underlying basis, the highest in their history.

Waitrose looked to have fared less well, however, with sales down 1% at £7.5bn, though they nudged ahead 1% on a like-for-like basis. Sales were also up 11% on the same basis year-on-two-years.

The bonus, which John Lewis has traditionally paid all staff, was halted last year for the first time in 67 years after the retailer was rocked by the pandemic and a surge in demand for online shopping. At the time, it said it would not resume payouts until pre-exceptional profits reached £150m.

White also launched an overhaul of the business, including shutting underperforming stores, cutting jobs and strengthening the online offering. During the most recent year, eight John Lewis stores and one delivery hub were closed, and it was announced that its ‘Never Knowingly Undersold’ pledge would be dropped this summer.

Looking to the current year, White said: “We see continued uncertainty from global events, affecting the economic environment, our customers, partners and society. As inflation and energy prices rise, our customers face higher living costs.

“While this creates uncertainties, we remain focused on investing significantly in our plan to transform and grow our business.”

The retailer added it would pay the voluntary living wage nationwide this year, with staff also getting a 2% pay rise, to help address the cost of living squeeze.

Independent retail analyst Nick Bubb said: “Those who work in the business will be pleased with the expected 3% bonus.

“John Lewis didn’t beat that profit target by much, however, and although our forecast of £190m pre-exceptional profits for the year was in the right ballpark, the £181m outcome implies that the second half was pretty disappointing, given how much was banked by the first half recovery.”

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