John Lewis returns to profit but cuts staff bonus for third year running
The employee-owned John Lewis Partnership (JLP) will again not pay staff a bonus this year, but it has reported a return to profit, as boss Sharon White nears departure.
The high street heavyweight, which also owns Waitrose and the chain of eponymous department stores, reported profit before tax of £56m, marking a £290m improvement year-on-year.
Sales across its entire business climbed by just one per cent to £12.6bn, with supermarket sales leading the growth thanks to efforts to lower prices for customers.
JLP said today it would invest one billion pounds into the refurbishment of some Waitrose stores and would also look to open a handful of more sites.
An announcement on the exact number of new sites is expected in the coming months.
Meanwhile, at the ailing department store, John Lewis sales were down four per cent to £4.8bn due to weaker demand for home ware and technology.
Speaking today, outgoing boss Sharon White said: “We have made significant progress in the last year to return the business to profitability and delivered results that allow us to increase investment in our retail businesses; we expect profits to grow further this year.
“This year we will unashamedly focus on investing back into our retail businesses for our customers, including opening new Waitrose shops and continuing to modernise our brand offering in John Lewis, while prioritising pay for our Partners.”
It will be the third year in a row staff at the Partnership do not receive a bonus.
The iconic package, first introduced in 1953, was cut due to a slowdown in sales amid the pandemic.
However, the firm said it was increasing overall pay by £116m in 2024, describing it as a “record investment for the business”.
Today’s update comes ahead of White’s departure as chairman early next year, with the firm remaining tight lipped about who her successor may be.
The 160-year-old chain previously faced criticism for not having a cohort of senior management with experience in the retail world. White was head of Ofcom before she took the reins.
In January, John Lewis brought former director Peter Ruis back to lead the group’s department store business.
The retail veteran has had senior-level stints at some of the world’s most recognised fashion brands, including Jigsaw, Anthropologie, Marks and Spencer.
Just under a year ago the Partnership also hired former Hovis boss Nish Kankiwala as its first-ever chief executive.
Robyn Duffy, senior analyst for consumer markets at RSM UK, said: Despite being one of Britain’s best-known brands, John Lewis has struggled to stay relevant in recent years.”
“A fast-moving economic environment has meant changing consumer habits have got the better of the business as the brand seemed to be missing the mark, whilst direct competitors Next and Marks and Spencer have prospered.”
She added: “As an employee-owned business that has failed to pay bonuses for several years, and with competitors seeing strong growth, the pressure is now on for new leadership to bring positive change.
“New CEO Nish Kankiwala has announced a ‘back-to-basics’ approach and plans to put retail back at the heart of John Lewis. Noise around the proposed housing and financial services plays have quieted for now, both interesting ideas but in a challenging retail environment a return to core values is needed.”