John Lewis reinstates staff bonus but remains ‘cautious’
John Lewis has returned its staff bonus after years of its suspension, as the retail titan turned a profit but remains “cautious” in a testing retail environment.
The partnership, which also owns Waitrose, made a £134m profit in the year to January 2025, up six per cent from the year before, and notched growing sales – up five per cent to £13.4bn
The retailer first cut its staff bonus in 2020 and has only handed it out once in the years since, as new boss Jason Tarry attempts to tighten the ship after the “social club” reign of its former boss.
John Lewis will hand out a two per cent bonus to all partners, which it says is equivalent to a week’s pay.
Analysts had been holding their breath in the run up to the retailer’s financial results, as the company had reportedly said it would only return the bonus if it notched a £200m profit.
The firm is in a position to return to the bonus system because of “improving cash generation, good liquidity and low levels of external borrowing,” its report said.
The clothing and homeware group’s profit was held back by “headwinds” including £53m in unexpected tax – comprising £13m from a new packaging levy and £40m from the hike to employer national insurance contributions.
‘Cautious’ amid turnaround
The firm has repositioned itself in recent weeks, having pulled out of its rental housing venture and secured accreditation as an insurance broker.
Sales at upmarket grocery chain Waitrose grew seven per cent to £8.5bn, driven by its “home of food lovers” strategy which relies on high-quality, specialised food counters.
Performance at John Lewis was slower, with sales up three per cent to £4.9bn. But it said major refurbishments at stores like Liverpool are part of a “multi-year investment”.
The retailer “remains cautious” in its outlook for the coming year, its results said, citing a “challenging macroeconomic environment”.
Retailers have warned they are facing rising tax burdens and employment costs, with many bosses concerned that Labour’s workers’ rights reforms could threaten their supply of flexible and seasonal work.
Tarry said: “Despite a subdued market, a challenging lead into the crucial peak period and increased taxes, we took the decision to continue investing in the business, and have delivered cash and profit growth.
“There is much still to do, but our growing cash generation and strong balance sheet enable us to invest more in our brands and our Partners to improve the experience for our customers.”
Robyn Duffy, consumer markets senior analyst at RSM UK, said: “The Partnership remains focused on its core retail brands, John Lewis and Waitrose, where significant investment is underway.
“As volatility returns, John Lewis needs to remain agile. If tensions in the Middle East persist, the impact could be felt across consumer confidence in the near term and inflation further down the line, potentially intensifying cost-of-living pressure.”