John Lewis Scraps Bonus for First Time Since 1948
(Bloomberg) -- John Lewis Partnership Plc won’t pay staff an annual bonus for the first time in more than 70 years, after a first-half loss added fresh evidence of Covid-19’s toll on British retail.
The 55 million-pound ($71 million) loss at the employee-owned partnership was mostly driven by a 10% drop in sales at John Lewis, the department store chain whose shops were closed for three months during the first half. Its other business -- the upmarket grocer Waitrose -- performed better with like-for-like sales rising by almost 10% as people bought more food while working remotely.
The retailer, a favorite among Britain’s middle classes, has also confirmed it will not pay an annual bonus to its more than 80,000 staff, known as partners. It is the first time since 1948 after the Second World War that it will not pay the profit-sharing bonus, which was once as high as 24% of a worker’s salary.
The partnership is in the midst of a turnaround led by Sharon White, the former U.K. telecommunications regulator. Since joining in February, she has had to take some tough decisions including permanently closing eight out of 50 John Lewis branches with the loss of up to 1,300 jobs. Yesterday it announced that four Waitrose stores would be closing too.
White has also launched a strategic review of the business, where profits have plummeted in the last three years as more consumers turn to shopping online. The full outcome of the review will be revealed next month.
Although sales have been recovering at John Lewis since its stores reopened, the outlook for the second half is “clearly uncertain,” White said Thursday in a statement. Overall the group now expects the likely outcome for the full year “will be a small loss or a small profit.”
Shoppers are spending more on less profitable lines such as laptops and toilet paper, the company said. It also recorded 50 million pounds of extra costs related to buying equipment to run its stores safely during the pandemic.
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