John Lewis staff could lose their share of the department store giant’s profit for the first time since 1953.
Traditionally, John Lewis pays a share of its profit to its 83,000 workers, however this has been brought into doubt after the retailer said it would “consider carefully” whether the bonus would be prudent. Despite the threat to its staff bonus, John Lewis saw its sales in the seven-week Christmas period rise 1.4% on the same period last year.
Gross like-for-like sales, which do not included store openings and closures at its Waitrose stores, were also up 0.3% for the same period. Online sales at Waitrose saw a strong rise of 12.8% on last year, while John Lewis announced an 11% sales rise in the week running up to Christmas.
John Lewis is owned by its staff, and in profitable years workers at 350 Waitrose and 51 John Lewis stores usually receive a share of the takings. It is reported that in the best years for the group, staff have received a bonus worth more than a couple of months pay.
Sir Charlie Mayfield, chairman of the John Lewis Partnership, outlined the challenges facing shopkeepers: “Two main factors are affecting the retail sector – oversupply of physical space and relatively weak consumer demand. Despite this, we had a positive Christmas trading period, thanks to the extraordinary efforts of partners in our business.”
“Every year the board looks at what we can afford to pay in bonus in March. What we’ve said is because of the steps we’ve taken we’ve got a strong financial position and we can afford to pay a bonus. The question is whether it’s prudent to do so and of course that’s a judgement about what’s coming and the uncertainty in the market and this year of course there’s quite a lot of that. So we just have to look at that sensibly.
“In our business, it’s owned by the people who work in it, we live within our means and we have to take account of what’s coming up even if it’s uncertain and we can’t quite judge it perfectly.”
Mayfield added that he expected full year profits at the group to be “substantially” lower this year.