John Lewis cuts staff bonuses as profits dive 77%

John Lewis cuts staff bonuses as profits dive 77%

A "particularly strong" performance in womenswear was not enough to offset a 77% drop in profit at the John Lewis Partnership for the full-year.

United Kingdom retail group John Lewis Partnership, which operates John Lewis department stores and the Waitrose supermarket chain, saw profit before exceptionals fall 21.9% to £289.2 million in 2017, according to its full-year results, released today.

"Partnership Bonus has been awarded at 5%".

Staff still on board after the latest round of redundancies will be handed a bonus of five per cent of annual salary, with 85,500 partners sharing out a pot worth £74 million, down from £89.4 million the previous year.

It comes as the partnership - which owns the eponymous department store and upmarket supermarket Waitrose - posted a 77% plunge in bottom line pre-tax annual profits to £103.9m after one-off charges.

Despite the bonus cut, Mayfield said John Lewis was committed to increasing pay for its ordinary workers who earn an average £8.91 an hour, well above the legal minimum of £7.50 an hour for over-25s.

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

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John Lewis Partnership, which is owned by the employees of the two retail chains, had already warned in January that annual profits would be hit amid attempts to remain competitive despite facing cost pressures from the weak pound.

Waitrose achieved gross sales of £6.75 billion past year, up 1.8% compared to 2016, with like-for-like sales, excluding fuel, increasing by 0.9%.

Sir Charlie Mayfield, chairman of John Lewis Partnership, said: "As we anticipated, 2017 was a challenging year".

Waitrose has seen like-for-like sales rise 2.4% since the year-end.

If you were looking for a reason for the tough year at the John Lewis Partnership, you might look no further than Waitrose.

"We expect trading to be volatile in 2018-19, with continuing economic uncertainty and no letup in competitive intensity", John Lewis said in a statement.

"We did both and I am pleased to say that despite lower profits, strong cash flow has enabled us to reduce our total net debts". However that appeared to have a knock-on effect on profits, with operating profit before exceptionals down 32.1 per cent to £172 million due to lower margins after not all cost price inflation was passed onto customers and investments in customer experience.

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