John Lewis axes next year’s staff bonus
Its result for the first half of the year (up to 25 July 2020), reveal it suffered a pre-tax loss of £635m, which included ‘exceptional costs’ of £580m. Excluding these one-off costs, the group’s loss for the six months stood at £55m.
It said this loss “is about the same as this time last year, a creditable performance in the circumstances”.
Sharon White, chairman of the John Lewis Partnership also confirmed that staff will not be given a bonus next year given its profit outlook.
She said: “I know this will come as a blow to partners who have worked so hard this year. The decision in no way detracts from the commitment and dedication that you have shown.
“Outside of exceptional circumstances, we would now expect to begin paying a bonus again once our profits exceed £150m and our debt ratio falls below four times. Once our profits rise above £300m and a debt ratio below three times, we would expect to pay a bonus of at least 10%.”
This is the first time since 1953 that the annual bonus has been dropped.
The news come after John Lewis announced it was to close eight stores due to the impact of the pandemic.
However, it reported online sales growth of 73%, helping to offset the impact of shop closures, with overall sales down 10% on last year.
In Waitrose, like-for-like sales were up almost 10% on last year. Demand for online shopping means it is delivering around 170,000 weekly orders, up from around 60,000 before the pandemic.
The results also revealed that it received £55m in support from the government under the Coronavirus Job Retention Scheme, which it exited in July.
Susannah Streeter, senior investment and markets Analyst at Hargreaves Lansdown, said losing the bonus will be a huge blow to workers who have been at the retail front line of the pandemic – at tills, in warehouses and on delivery trucks.
“The fact that it’s the first time since 1953 that John Lewis will not pay out a proportion of profits to staff highlights the once in a generation challenge the retail sector is facing.
“The pandemic has brought about a revolutionary shift in shopping habits as consumers switch to online stores and opt for click and collect services from the high street. For retail giants like John Lewis who have dominated the sector with mega footprints across shopping centres and retail parks, pivoting quickly to keep up has been a huge challenge.”