John Lewis axes staff bonus after racking up first-half loss

The retailer made an interim loss of £55m, similar to that suffered in the comparable period last year. Chair Dame Sharon White said trading at both John Lewis and Waitrose had been “encouraging” in the second half so far but the board had decided there could be no bonus when profits were under such pressure. She had already warned of that likelihood.

At John Lewis department stores, total trading sales - reflecting full customer sales value, including VAT and before adjustments for sale or return sales and other accounting adjustments -fell 9.7% to £1.86bn and like for likes were down 9.5%. At Waitrose trading sales climbed 7.6% to £3.7bn and like for likes were up 9.6%. 

John Lewis’ online sales rose 73%, helping to offset the impact of shop closures during the Covid lockdown. The retailer said that sales momentum is “starting to build in reopened stores” – sales are down 30% on last year, which is “ahead of expectation”. 

However, the value of John Lewis shops has been written down. The retailer said: “Before the crisis we believed that shops contributed around £6 of every £10 spent online. We now think that figure is, on average, around £3. This has the effect of reducing the book value of John Lewis shops by about £470m.”

White said: “I could not be more proud of how partners have responded to the impact of the pandemic. From the initial lockdown that saw all John Lewis stores close, to surging demand in Waitrose and a huge shift to home delivery in both brands; through to the reopening of John Lewis stores; the easing of lockdown and continued focus on social distancing and other safety measures.”

However, she went on: “I said to partners in April that I could not see the circumstances in which we would be able to pay a bonus next March. The Partnership board has now confirmed that there will not be a bonus next year given our profit outlook.

“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.

“Outside of exceptional circumstances, we would now expect to begin paying a bonus again once our profits exceed £150m and our debt ratio falls below four times. Once our profits rise above £300m and a debt ratio below three times, we would expect to pay a bonus of at least 10%.”