John Lewis Partnership is preparing to grant thousands of employees an annual bonus for the first time in four years. The company, which operates John Lewis stores and Waitrose supermarkets, announced that its staff will receive a 2% bonus amounting to approximately £35 million.
This bonus marks the first time employees have received such an incentive since 2022 when the company faced store closures and staff reductions due to the impact of the Covid pandemic. With a workforce of around 65,000 members, the John Lewis Partnership’s decision to reinstate bonuses follows its latest financial report, showing a 6% increase in profits before tax, bonus, and exceptional items to £134 million. However, the company reported a pre-tax loss of £21 million, a significant decline from the £97 million profit recorded the previous year.
The company attributed the loss to write-downs associated with outdated tech systems and additional expenses due to tax changes implemented in April, including higher employer National Insurance contributions. Despite these challenges, the business reported a 5% rise in sales to £13.4 billion for the year, while expressing caution in its outlook for the current financial period amidst a complex economic landscape.
Jason Tarry, Chairman of the John Lewis Partnership, acknowledged the subdued and fragile consumer sentiment, highlighting a 7% growth in supermarket sales despite broader volume decreases in the market. He emphasized the company’s cautious approach, especially in discretionary sectors, noting the ongoing uncertainty surrounding global events.
Tarry reassured that the recent conflict in the Gulf had not impacted the company’s supply chains and anticipated no immediate effect on energy costs due to hedging strategies. He underlined the company’s satisfaction with the progress of its major transformation initiative, which includes an £800 million investment in store enhancements and a renewed focus on core retail operations.
In a strategic shift, the company recently abandoned plans to construct approximately 10,000 rental properties, citing cost escalation and market apprehensions. Tarry expressed confidence in the company’s long-term investment strategy, emphasizing growth in customer base and record satisfaction levels despite market challenges and tax increases. The decision to persist with business investments amid a challenging economic climate has resulted in positive cash and profit growth for the company.