John Lewis and Waitrose staff bonuses scrapped as Britain battles rising cost of living
A ‘hurricane’ of inflation swept through sales and staff bonuses at John Lewis and Waitrose as Britain battled rising costs of living.
The retail giant slumped with a loss of £234m last year as Waitrose sales fell 3% while the department store chain’s revenue rose only by 0.2%.
Overall, this left John Lewis Partnership sales down 2% to £12.25billion in the 12 months to January 28.
Pressure: The John Lewis partnership, led by Dame Sharon White (pictured), fell to a loss of £234m as Waitrose sales fell 3% while John Lewis revenue only rose by 0.2%
It is only the second time since 1953 that it has failed to pay its annual bonus to its 74,000 employees – who are known as “partners” and who effectively own the business.
And it will have to lay off staff as customers cut back on the “nice-to-have” products that characterize its brand.
Chairman Dame Sharon White warned against cost cuts, saying: “As we need to become more efficient and productive, this will impact our number of partners. This is a huge regret for me.
The loss of £234 million, compared to a loss of £27 million the previous year, was largely due to a write-down in the value of its stores.
Taking those out of the equation, the loss before exceptional items and tax was £78m, compared to a profit of £181m the previous year. In a letter to staff, White apologized for the lack of bonuses after a “difficult string of results”.
She said: “You have been exceptional in what has been another very difficult year. Two years of pandemic and now a cost of living crisis.
Inflation has had a big impact on the partnership and has caused our costs to skyrocket, up almost £180m from last year.
John Lewis has named Nish Kankiwala, a former Hovis and Burger King executive, as the first chief executive to help turn around his fortunes.
Waitrose sales fell 3% to £7.31bn while John Lewis sales rose just 0.2% to £4.9bn. However, given an inflation rate of over 10%, this is a disappointing figure.
Susannah Streeter, head of money and markets at Hargreaves Lansdown, said: ‘The cost of living crisis has blown a chilling wind across the retail sector, but brought a hurricane of trouble for John Lewis .
‘Although the High Street showed pockets of resilience among retailers offering value-for-money essentials, the nice-to-have items that are John Lewis’s bread and butter have been dropped from baskets.
“Waitrose, in particular, has been swept away by the trend. Shoppers put less in their carts and headed to cheaper stores.
Josh Holmes, senior consultant at Retail Economics, said: “These results are worse than expected, with Waitrose and John Lewis seeing their profits shrink as inflation drives up costs.”
“The retailer must ensure that it does not lose sight of what made it great in the beginning: quality, customer service and an ambitious brand image.
Putting cost reduction at the forefront of the corporate agenda could undermine these values and risk losing further ground to competitors.
