John Lewis is back in profit, but STILL struggling to keep up with rival M&S

The John Lewis Partnership is back in trouble after three years of losses but is struggling to keep up with rival Marks and Spencer’s revival.

The group behind department stores Waitrose and John Lewis announced a profit of £56m for the 12 months to the end of January, after making a £234m loss a year earlier.

It was the first profit since the pandemic struck, but was accompanied by a somewhat disappointing 2 percent increase in sales to £10.8 billion.

And the profits were still not enough for bosses to bring back annual bonuses for staff, as The Mail revealed last weekend.

John Lewis is owned by its 70,000 employees, known as ‘partners’. Normally they get an annual bonus on top of their base salary, but this year they have been disappointed again.

The company, led by chairman Dame Sharon White, who is leaving next year, said it would be ‘not right’ to award a payout while the company is cutting costs. It is the second year in a row that employees have not received a bonus and the third time since 1953.

John Lewis’ woes put it at odds with M&S, which burst back into the FTSE 100 last year as its recovery accelerated.

In the latest figures, M&S posted its 11th consecutive quarter of growth, including a 7 percent year-on-year sales increase over Christmas.

Food sales led the way with 10 percent growth, while clothing and household goods rose 5 percent.

Analysts attribute this to M&S dropping its shoddy clothing and attracting younger buyers. Actress Sienna Miller was the face of the autumn collection and Ted Lasso star Hannah Waddingham was featured in the Christmas advert.

In January, M&S CEO Stuart Machin said the company was entering 2024 with a “spring in our step”.

John Lewis, on the other hand, has struggled to revive its stores. Yesterday it said department store sales fell 4 percent to £4.8 billion last year, largely pressured by weak performance for home and tech products as shoppers cut back.

But Waitrose was a bright spot, with sales up 5 per cent to £7.7 billion, despite prices rising by an average of 7 per cent in the year.

Last year, another million customers shopped with the group, bringing the total to 22.6 million.

But the improvements were not enough to restart the annual bonus, which could be controversial for workers concerned about job losses.

And instead of giving them a bonus, bosses said it was a responsibility to ‘ensure the partnership is sustainable in the long term’, which meant investing in stores and increasing basic wages .

Wages could be increased by a record £116 million this year, the report said.

It comes as the company continues a turnaround, which could mean 11,000 job losses over the next five years in a bid to save £900m, reports suggest. The group has already made £88 million in cuts in the last financial year.

Yet John Lewis warned at its September half-year results that it would take another two years to complete the cuts, pushing the end date from 2025-26 to 2027-28.

White said it would “unapologetically” focus on its retail business by opening more Waitrose stores and refurbishing existing ones. John Lewis has also scrapped targets for its non-retail divisions, including its financial services and housebuilding divisions.

This marks a major drop from previous targets, which included building and renting 10,000 homes as part of plans to generate 40 percent of profits from off-site retail by 2030.

But change is already coming. In October, White said she would step down as chair in February 2025, making her the shortest-serving boss in the partnership’s 94-year history.

The former Ofcom chief joined in early 2020 and was criticized for her lack of retail experience. Rumors are swirling about who will be her replacement.

Katie Bickerstaffe, the first woman to lead M&S when she was appointed co-CEO two years ago, has been tipped as a candidate. She leaves M&S in July and has helped revive the High Street giant.

Garry White of asset manager Charles Stanley said M&S’s revival meant John Lewis’ sustainability was ‘not guaranteed’.