John Lewis staff bonus scrapped for first time since 1948

John Lewis employees will not receive a bonus for the first time since the aftermath of the Second World War, as the amount of money spent in stores plummeted during the Coronavirus crisis.

Thursday, 17th September 2020, 4:45 pm
Updated Thursday, 17th September 2020, 7:38 pm
John Lewis will not pay out a bonus to partners this year.
John Lewis will not pay out a bonus to partners this year.

Staff, known in the business as “partners”, have received a pay out every year since 1953, when a halt to bonuses implemented in 1948 came to an end.

Chairman Dame Sharon White said in a report with the company’s half year results that the move would be a “blow” to workers and insisted that it would be reinstated as soon as the business returned to profits of £300m.

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John Lewis, which also includes Waitrose supermarkets as well as its department stores, posted pre-tax losses of £635 million, but said that included an impairment figure of £470m on the book value of its stores. The firm said that before the crisis, its department stores contributed around £6 of every £10 spent online, but that the figure had dropped to around £3.

However, it said that the picture was looking brighter than when it issued its trading update in April, when it warned of a “worst case view”.

Losses before taking into account “exceptional items” such as the impairment figure, have remained steady at £55 million, around the same as last year, which Dame Sharon described as a “creditable performance in the circumstances” and ahead of expectations laid out in its April trading update.

She said in a letter to staff: “In April, we set out a worst case scenario for the full year of a sales fall of 5 per cent in Waitrose and 35 per cent in John Lewis. That remains our worst case view. We now believe the most likely outcome will be a small loss or a small profit for the year.”

“I know this will come as a blow to Partners who have worked so hard this year. The decision in no way detracts from the commitment and dedication that you have shown.”

Sales across the group increased by 1.1 per cent to £5.56 billion for the half-year, but the company saw higher sales of “less profitable lines such as laptops and loo rolls”.

Online sales were “strong” with 73 per cent growth during the period, while department store business has seen sales momentum “starting to build” since reopening sites, with sales around 30 per cent lower than the same period last year, but ahead of expectations. Meanwhile, the group's Waitrose grocery business saw like-for-like sales increase by almost 10 per cent for the period as shoppers continued to go to supermarkets throughout the lockdown period.

John Lewis said its first half performance includes Government support of £55m of furlough money and £51m from the business rates holiday. This was set against lost trade from the closure of John Lewis shops, which it estimates is over £200m of sales, as well as additional costs related to the pandemic of around £50m, including the cost of providing safety equipment, extra donations to charities and local communities.

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