Yahoo Finance John Lewis staff bonuses fall as profit crashes by 45%
Staff bonuses at John Lewis have fallen to a 55-year low of 3%, the department store said on Thursday.
This marks the sixth consecutive annual fall in the bonus pot for staff at John Lewis Partnership, which also includes Waitrose. The bonus level fell from 5% last year and is down from 15% 10 years ago.
The bonus cut means John Lewis Partnership’s 83,000 employees will share a pot worth £44.7m, down from £74m the previous year.
However, the award is better than expected — John Lewis warned in January that it might have to axe the renowned payout for the first time since 1953 as it battles challenging trading conditions.
The bonus cut came as John Lewis said profits crashed by 45.4% to £160m in 2018. Sales rose by 1% to £11.7bn.
The group blamed the fall in profit on weaker home sales, margin pressure, higher IT costs, the property impact of new shops, and lower profits on asset disposals.
“In line with expectations set out in June, our partnership profits before exceptionals have finished substantially lower in what has been a challenging year, particularly in non-food,” John Lewis chairman Sir Charlie Mayfield said.
“The board has awarded a bonus at 3%. This enables us to continue debt reduction, maintain our level of investment, and retains solid cash reserves to cope with the continuing uncertainty facing consumers and the economy.”
Mayfield warned he expects conditions to “remain challenging,” but said the company is “confident in our strategic direction and customer offer across both brands.”
Retailers suffered a brutal end to 2018, with Sports Direct founder Mike Ashley saying November was the “worst on record” and Asos’ share price falling almost 40% on a December profit warning.
John Lewis also warned on Thursday that a hard Brexit could spark “a strong fall in consumer confidence and the impact that has on trade.” The retailer said it has been “preparing for the operational implications of Brexit for well over a year” and has “a strong liquidity position at nearly £1.5bn.”
While the flagship John Lewis department stores performed poorly, the group’s supermarket chain Waitrose enjoyed a rebound in profits. Operating profit rose by 18% to £203.2m in 2018 at the upmarket supermarket.
