Retail giant the John Lewis Partnership has revealed it slumped to a £99 million half-year loss as it said it chose to “forgo” profit to help staff and customers through the cost-of-living crisis.
The employee-owned group announced a £500 one-off payment to full-time workers, with a pro-rata amount for those working part-time, as it stepped up efforts to support staff.
It also said it is increasing by 4% the entry level pay for employees – known as “partners” within the group – which will cost it £10 million over the second half as part of a £45 million support package.
But the measures, as well as efforts to rein in prices for customers despite “unprecedented” hikes in its own costs, are taking their toll on the firm’s bottom line.
Its widened pre-tax losses for the six months to July 30 compare with losses of £29 million a year earlier.
The group warned of a “highly uncertain” end to the year – including the peak Christmas season – as the cost crunch affects consumer spending.
It also warned employees that it will need a “substantial strengthening” of its performance over the second half to put it on track to pay out an annual staff bonus.
Dame Sharon White, chairman of the John Lewis Partnership, told the PA news agency the move to ramp up financial support for employees is “the right thing to do”.
She said: “We have made a conscious choice to forgo some of our profit to provide more support to partners and more support to some of our suppliers and customers as well.”
Dame Sharon added: “Given what we have seen with energy bills and direct debits starting to land, we felt it was the right thing to do.”
She welcomed the Government’s move to cap gas and electricity bills at £2,500, saying “the energy freeze and the fact it’s in place for two years is positive for consumer sentiment”.
But the group still warned over the outlook for the rest of the year.
Dame Sharon said: “No-one could have predicted the scale of the cost-of-living crisis that has materialised, with energy prices and inflation rising ahead of anyone’s expectations.
“As a business, we have faced unprecedented cost inflation across grocery and general merchandise.”
The one-off payment will benefit all of the company’s 76,000 workers, of whom around 60% are full-time and 40% part-time.
The group has already announced it will double its support fund for employees from £400,000 to £800,000 with a combination of grants and some loans for staff in financial difficulty, while in April it said it would give its employees a 2% pay rise and a 3% bonus.
The results showed like-for-like sales lifted 3% year on year in the department stores in the first half, but fell 5% in its Waitrose stores.
Shoppers have been cutting their spending on so-called big ticket items and focusing instead on meals out and holidays as the cost squeeze tightens, according to the group.
It has also seen sales of items such as energy-saving lightbulbs “rocket”, Dame Sharon said.
John Lewis has invested £500 million in pricing across the brands, including a focus on its more affordable AnyDay range to help cash-strapped shoppers.