John Lewis Partnership has cut its bonus payout to staff to the lowest level in almost 60 years as profits continue to slide.
John Lewis Partnership, which owns the John Lewis department store and Waitrose supermarket, said staff would receive 2% of salary as a bonus this year, down from 3% last year.
It marks the seventh year in a row that John Lewis has cut staff bonuses and the lowest bonus since 1953. The award was as high as 18% in 2011.
The bonus cut came as John Lewis Partnership reported a 23% slump in profits to £123m. Sales fell by 1.5% to £11.5bn ($14.7bn).
Chair Sharon White said it was “a weaker performance than we had hoped for, driven by significantly reduced profitability in John Lewis.” She said the bonus payout was “prudent and affordable” and would still allow the business to invest.
John Lewis Partnership staff should also brace for cuts, White warned. The head office will be “slim[med] down” and some stores will be closed. The group didn’t give any guidance on the number of job cuts or store closures but said Waitrose stores in Helensburgh, Four Oaks, and Waterlooville will close later this year.
“These decisions are never taken lightly and every Partner who wishes to stay in the Partnership will be actively supported to do so,” White wrote.
White announced a strategic review alongside the results, aimed at reversing the profit slump. She promised to improve John Lewis’s homeware range and boost online sales. Further details of the turnaround plan will come later this year.
“All of us are aware of the challenges in retail,” White wrote in a letter to staff. “New technology means that shoppers have never had so much choice, value and convenience.”
Like other department stores, John Lewis has struggled as retail sales have increasingly shifted online to one-stop-shops like Amazon. Waitrose is also facing competition from the likes of Ocado (OCDO.L), which used to partner with the supermarket but has now partnered with rival Marks & Spencer.
White said any turnaround strategy could take three to five years to pay off.