John Lewis Partnership slashes bonus as Waitrose profits fall
The John Lewis Partnership, known for its generous staff incentives, has slashed the bonus payout to its partners after a hit on profits at its upmarket grocery chain Waitrose.
Staff will receive a bonus of 11 per cent of their annual salary, down from last year's 15 per cent – the third annual decline in a row.
READ: Why John Lewis staff are still cheering a smaller bonus
Pre-tax profit at John Lewis Partnership fell nine per cent in 2014 to £343m, due to the impact of Waitrose's performance in what it called a "highly competitive and deflationary market". That's despite a six per cent rise in customer numbers at the supermarket for the year to 31 January, after it grew its market share to its highest ever levels, according to Kantar's latest figures.
Waitrose sales grew 6.5 per cent to £6.51bn, with like-for-like sales up 1.4 per cent. Operating profits fell 23.4 per cent to £237.4m, also affected by higher levels of investment and the impact of one-off items involving property, leases and opening new branches, in addition to the troubles in the under-pressure supermarket sector.
In the short term, it expects lower supermarket returns to continue in 2015.
Sir Charlie Mayfield, the retailer's chairman, said:
We expect the returns for the grocery sector to be materially lower for a period of time. Waitrose's value perception has improved significantly over the last few years and we will continue to defend that hard won position during this period of change in the grocery sector.
At John Lewis, operating profit ticked up 10.8 per cent to £250.5m on sales of £4.4bn, which were also up 9.2 per cent on the previous year, or 7.5 per cent on a like-for-like basis, helped by the growth of online shopping.
For John Lewis, which hit upon huge success with its Christmas advertising featuring a penguin called Monty, Mayfield said the outlook was more robust.
Our focus remains on positioning our brand to outperform and our investment in supply chain and systems, which has been growing for some years, will exceed that in new shops and refurbishment for the first time this year.
It will focus on "bricks and clicks", opening a regional flagship store in Birmingham this year and online ordering Click and Collect services, which for the first time overtook home delivery last year.