John Lewis and Waitrose employee bonuses were scrapped as Britain grapples with a rising cost of living
A ‘hurricane’ of inflation wiped out sales and employee bonuses at John Lewis and Waitrose as Britain grappled with a rising cost of living.
The retail giant crashed to a loss of £234 million last year as sales at Waitrose fell 3 per cent, while revenues at the department store chain rose just 0.2 per cent.
Overall, sales within the John Lewis Partnership fell 2 per cent to £12.25 billion in the 12 months to 28 January.
Busy: The John Lewis Partnership, led by Dame Sharon White (pictured), fell to a loss of £234m as Waitrose sales fell 3%, while revenues at John Lewis rose just 0.2%
It is not paying its annual bonus to its 74,000 employees – who are known as “partners” and actually own the company – for the second time since 1953.
And it will have to cut staff as customers cut back on the “nice to have” products that are a hallmark of the brand.
Chairman Dame Sharon White warned of cost cutting, saying: ‘As we need to become more efficient and productive, it will have an impact on our number of partners. I think that’s a great pity.’
The loss of £234 million, compared to a loss of £27 million the year before, was largely due to store write-downs.
Excluding these, the loss before exceptional items and tax was £78 million compared to a profit of £181 million the year before. In a letter to staff, White apologized for not receiving a bonus after a “difficult run of results.”
She said, “You have been exceptional in what has been another very difficult year. Two years of a pandemic and now a crisis in the cost of living.
Inflation has had a major impact on the partnership and has caused our costs to skyrocket, nearly £180m more than last year.”
John Lewis has appointed Nish Kankiwala, a former executive of Hovis and Burger King, as the first CEO to help turn his fortunes around.
Waitrose sales fell 3 percent to £7.31 billion, while John Lewis sales rose just 0.2 percent to £4.9 billion. At an inflation rate of more than 10 percent, however, this is a disappointing figure.
Hargreaves Lansdown’s head of money and markets, Susannah Streeter, said: ‘The cost of living crisis has blown a chill wind through the retail sector, but has created a hurricane of trouble for John Lewis.
“While the High Street has shown resilience with retailers offering value-for-money essentials, the fun items, John Lewis’s bread and butter, are falling out of shopping baskets.
Waitrose in particular has been sidelined by the trend. The shoppers put less and less in their carts and get out to cheaper shops.’
Senior consultant at Retail Economics, Josh Holmes, said: ‘These results are worse than expected, with both Waitrose and John Lewis seeing profits fall as inflation pushes up costs.
“The retailer needs to make sure they don’t lose sight of what made them so great in the first place: quality, customer service and an ambitious brand image.
Putting cost-cutting at the top of the company’s agenda could undermine these values and risk losing even more ground to the competition.”