John Lewis cuts staff bonus to the lowest level since 1953 at just 2% as it posts punishing drop in profits and warns shoppers that store closures are on the cards
- John Lewis saw total annual profit fall by 23% to £123m, latest results show
- Annual staff bonus now stands at 2%, the lowest since 1953
- Three Waitrose store closures have been announced today
The John Lewis Partnership has cut its staff bonus to just 2 per cent, after posting a 23 per cent drop in annual profits to £123million.
At 2 per cent, the staff bonus is the lowest payout since 1953 and new boss Sharon White has warned that store closures will be necessary to get the group’s bottom line back on track.
Profits at the partnership have now fallen for three years in a row and in a bid to revive its fortunes, the former high-street darling has vowed to plough stacks of cash into its online offerings, technology and Waitrose, while scaling back jobs at its head office and sorting out its store portfolio.
Low bonus: The John Lewis Partnership has cut its staff bonus to 2 per cent
New boss Sharon White has vowed to launch a major transformation of the business, which encompasses the need to look at ‘right sizing’ stores, ‘through a combination of new formats and new locations; repurposing and space reductions of existing stores; and closures, where necessary.’
As a sign of what is to come, White revealed that three Waitrose sites are now set to close this year, namely those located in at Helensburgh, Four Oaks and Waterlooville.
White said a strategic review would focus on strengthening the core retail business and developing ‘new services outside retail.’
Delving deeper into the results, John Lewis had a dismal year, with operating profits slumping over 65 per cent from £114.7million to £39.5million, with shoppers spending far less money on electrical and homeware goods.
The picture was better at Waitrose, which saw its operating profits rise by £10million to £213million.
A year ago, the partnership’s annual staff bonus stood at 3 per cent. Having been cut to 2 per cent today, partners have now seen their bonus pot fall for the seventh consecutive year.
Closures: Three Waitrose stores are closing this year, the John Lewis Partnership announced
On the slide: John Lewis Partnership bonus payments through time and before today’s cut to 2%
Profits: John Lewis Partnership profit numbers since 2010, provided by MarketLine
Weekly sales: John Lewis Partnership weekly sales figures over the last year, provided by MarketLine
As part of its transformation scheme, which could take up to five years to implement, the retailer plans to cut management jobs, but added that it also plans to take on around 2,400 staff elsewhere in the business.
Julie Palmer, a partner at Begbies Traynor, said the retailer’s fall from grace had been ‘spectacular’ and warned if White could not turn around the chain ‘the fallout could be much worse.’
‘Once the envy of the retail industry, the company has suffered dismal trading performances over the past few years, demonstrating that the retail race is so fast that even those seemingly on an unstoppable march one year can be vulnerable the next.
‘This goes to show that no retailer is safe.’