John Lewis cuts staff bonus as profits plunge

Alicia Farmer
March 9, 2018

The group's poor performance has also driven a drop in partnership bonus for the fifth consecutive year to the lowest level for 63 years - standing at £74 million, or the equivalent of five per cent of salary.

Profit before tax fell 77% on the prior year to GBP103.9m in the 52 weeks to 27 January.

The partnership has John Lewis stores at Norwich and Ipswich as well as Waitrose sites at Swaffham, North Walsham, Wymondham, Norwich, Saxmundham, Sudbury, Ipswich, Bury St Edmunds and Newmarket.

As a result, the retail group is anticipating further pressure on profits.

"We said in January 2017 that we were preparing for tougher trading conditions with weakness in sterling feeding through into cost prices, putting pressure on margin, and much higher exceptional costs as a result of an acceleration of planned changes", partnership chairman Sir Charlie Mayfield said.

This week New Look added to the high street's dismal start to 2018 with its announcement that it was looking to close almost 10% of its 593-strong United Kingdom store estate.

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Waitrose sales rose 1.8% to £6.75bn, up 1.8%, with sales at established stores, excluding fuel, up by 0.9%.

"We expect trading to be volatile in 2018/19, with continuing economic uncertainty and no let up in competitive intensity".

In a statement issued today (8 March), Sir Charlie Mayfield, Chairman of John Lewis Partnership, said that 2017 had been a "challenging year" with subdued consumer demand and profits were down "mainly as a result of intensifying margin pressure in Waitrose".

Redundancy and restructuring costs were part of the £111.3m hit that contributed to the hefty fall in bottom-line profits. However, their hard work throughout the year was key to delivering gross sales of GBP11.60 billion, up 2.0%, with like-for-like increases in both Waitrose and John Lewis. Waitrose gross sales of £6.75bn were 1.8% ahead of last time, or 0.9% on a like-for-like basis, while John Lewis gross sales of £4.84bn were 2.2% up on previous year, or 0.4% LFL.

Waitrose saw like-for-like sales grow by 0.9% but at the expense of a 42% dive in operating profits, as higher costs were not passed on in prices.

Rob Collins, managing director of Waitrose, said that some of the cost price increases were dramatic, with Scottish salmon up 25 per cent while the retail price rose up to 5 per cent.

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