John Lewis staff miss out on bonus as business slides to £78m loss
John Lewis has said it will not hand staff a bonus for only the second time since 1953 after the retail group, which also owns Waitrose, fell to a £78 million loss for the year ending 28 January 2023.
Leaders said the business will now increase cost-cutting efforts to complete a turnaround of the group’s financial performance. The drop in revenues represents a big slump from a £181 million profit in the previous year, with John Lewis blaming “inflationary pressures”.
Chairwoman Dame Sharon White apologised to staff that they would not receive a bonus payment following a “tough set of results”.
In a letter to staff, White said: “You’ve been exceptional in what has been another very tough year. Two years of pandemic and now a cost-of-living crisis. Inflation has had a big impact on the partnership and sent our costs soaring – up almost £180 million on last year.
“I am sorry that the loss means we won’t be able to share a bonus this year or do as much as we would like on pay.”
Dame Sharon has also warned the retail will be considering job cuts to help complete a turnaround of the group’s financial performance.
In her letter she said: “As we need to become more efficient and productive, that will have an impact on our number of Partners. That’s a massive regret to me personally.”
Dame Sharon said there are currently “no numbers” on how many staff could be impacted but added that planned improvements will leave the company with a smaller workforce.
She later told reporters: “As we get more efficient, that inevitably means less time and fewer partners.
“We are trying to make clear this morning that the partnership planning is uprating the amount of efficiencies we can go after. We are expecting them to have impacts but there are no numbers.”
On Thursday, the retail group said it fell to the loss after customers bought less, with sales declining by 2% to £12.25 billion for the year. Waitrose sales declined by 3% to £7.3 billion, whilst John Lewis recorded 0.2% growth to £4.94 billion.
The retailers losses come only one day after the business appointed turnaround expert Nish Kankiwala to take on the role of CEO - the first time in history that the retailer has appointed someone to this role.
The former Hovis CEO and Chairman will take on the newly created role, supporting Chair Dame Sharon White with the day-to-day running of the retail giant.
JLP parted ways with previous John Lewis Executive Director Pippa Wicks last month. Wicks was responsible for trading, merchandising, marketing and developing products and services for the department store company. She could be held responsible for initiatives including replacing its almost century-old 'Never Knowingly Undersold' price matching pledge and launching its low-priced Anyday range.
Far from diverting from the Partnership Plan, the disappointing results and economic backdrop has "galvanised" John Lewis to go faster. The Partnership Plan focuses on two areas - increasing the appeal of its brands and building on them to diversify into new services.
Last year, the company invested more than £500 million into transformation plans. Waitrose is expanding in the all important convenience market through tie-ups with Dobbies (garden centres) and Shell, and getting exclusive brands. John Lewis also set out a clear pricing approach (good, better, best), brought stronger styling and design to own-brand fashion and home, and introduced over 200 new brands.
Positive winter trading updates from rivals Marks & Spencer and NEXT will perhaps provide optimism to John Lewis that there is potential to recover and perform despite current economics.