John Lewis Resumes Bonus Payout Amid Turnaround

(Bloomberg) --

John Lewis Partnership Plc said it will once again pay employee bonuses as the U.K. retailer’s turnaround efforts start to show small signs of progress. 

The department store group, which also owns the Waitrose supermarket chain, said Thursday that a return to profit on an underlying basis means it will reinstate the payout, which was suspended last year for the first time in more than 70 years. 

Staff, who co-own the business, will receive a bonus of 3%, equivalent to 1.5 weeks’ pay, and amounting to 46 million pounds ($61 million), John Lewis said Thursday. It also awarded staff a 2% pay rise this year, pledging to pay wages based on employees’ cost of living.

The pay boost is “a bold move that signals their commitment to the partnership model,” Richard Lim, chief executive at Retail Economics, wrote in a note to clients. “This difficult balancing act between commercial realities and business ethics is more transparent than ever before and increasingly important to consumers.” 

The decision came after sales at John Lewis hit a record of 4.9 billion pounds and Waitrose, which performed solidly during the pandemic as more people ate at home, delivered growth. 

Long known as the reliable choice for middle-class Britons and lauded for its “multi-channel” retailing and service levels, John Lewis has come unstuck in recent years, weighed down by expensive stores and challenged by more nimble rivals, particularly online. Sharon White, a former telecommunications regulator who joined as chair in 2020, is leading an overhaul that involves shutting stores and cutting costs.  

Return to Growth

As part of the turnaround, the partnership is planning to invest in the digital business and pursue new revenue streams, expanding further into financial services and converting excess space into private rented housing. The group hopes that 40% of its profits will come from outside the retail sector by 2030. 

White’s plan aims to return the company to profit by 2025. This strategy has involved replacing several key managers, closing stores and cutting more than 5,000 roles from the business to improve productivity and profit. 

White pointed to “continued uncertainty from global events” ahead, citing inflation as one of the factors affecting customers and the business. 

The partnership is co-owned by more than 80,000 employees and owns 331 Waitrose supermarkets and 34 John Lewis stores. 

The group made a profit of 181 million pounds before exceptional items, exceeding the 150 million-pound goal for paying a bonus again. It reported a 26 million-pound loss before tax, down from 517 million pounds last year, its first loss ever. 

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