John Lewis cuts staff bonus to 3% as profits plunge by 45%

Retailer cuts bonus for sixth year in a row

The John Lewis Partnership has cut its bonus to a 65-year low of 3 per cent after profits tumbled in the last financial year.

Staff had been concerned that the bonus would be cut completely as a result of the company’s struggles last year.

The bonus has been reduced every year for the past six, and employees received 5 per cent last year, down from a 15 per cent reward 10 years ago.

The retail giant reported a 1 per cent increase in sales, up to £11.7bn from £11.6bn, however profit before tax fell 45 per cent to £160m from £293m.

Sir Charlie Mayfield, chairman of the John Lewis Partnership, said this decline was due to weaker home sales, pressure on margins and higher IT costs.

He said: “While Partnership profits were down, there were several areas where we have seen performance move forward, particularly in areas where we have invested.

“In John Lewis & Partners the launch of our own-brand womenswear and expansion of personal styling offer has driven strong sales growth in fashion, growing market share significantly.”

Sir Charlie added that cutting the bonus would enable the group 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”.

“We expect 2019 trading conditions to remain challenging but are confident in our strategic direction and customer offer across both brands,” he said.

The retailer issued a profit warning last year, and announced plans to close several Waitrose stores, amid a tough year for the British high street.

John Lewis has been put under particular pressure due to its “never knowingly undersold” policy, and said it had seen an unprecedented level of price-matching last year.

At the beginning of 2019, the firm said Christmas trading had been disappointing, reporting the worst performance since the financial crisis.

Sir Charlie is due to stand down next year, having been in the chairman role since 2007.