John Lewis and Waitrose staff bonuses axed as as Britain struggle with rising living costs
A ‘hurricane’ of inflation swept away sales and staff bonuses at John Lewis and Waitrose as Britain struggled with rising living costs.
The retail giant crashed to a loss of £234million last year as sales at Waitrose fell 3 per cent while revenues at the department store chain were up just 0.2 per cent.
Overall, it left sales across the John Lewis Partnership down 2 per cent to £12.25billion in the 12 months to January 28.
Pressure: The John Lewis Partnership, led by Dame Sharon White (pictured), fell to a £234m loss as sales at Waitrose fell 3% while revenues at John Lewis rose just 0.2%
It is not paying its annual bonus to its 74,000 staff – who are known as ‘partners’ and effectively own the business – for only the second time since 1953.
And it will have to axe staff as customers cut back on the ‘nice to have’ products that are a feature of its brand.
Chairman Dame Sharon White warned of cost cuts, saying: ‘As we need to become more efficient and productive, that will have an impact on our number of partners. That’s a massive regret to me.’
The loss of £234million, compared to a loss of £27million in the year before, was largely driven by a write-down of the value of its stores.
Taking these out of the equation, the loss before exceptional items and tax was £78million, compared to a £181million profit the year before. In a letter to staff, White apologised for the lack of a bonus after a ‘tough set of results’.
She said: ‘You’ve been exceptional in what has been another very tough year. Two years of pandemic and now a cost of living crisis.
Inflation has had a big impact on the partnership and sent our costs soaring, up almost £180million on last year.’
John Lewis has appointed Nish Kankiwala, a former Hovis and Burger King executive, as the first chief executive to help turn around its fortunes.
Waitrose sales fell 3 per cent to £7.31billion while John Lewis sales rose by just 0.2 per cent to £4.9billion. However, given an inflation rate of over 10 per cent this represents a disappointing number.
Head of money and markets at Hargreaves Lansdown, Susannah Streeter, said: ‘The cost of living crisis has been blowing a chill wind through the retail sector but has whipped up a hurricane of problems for John Lewis.
‘Although the High Street has shown pockets of resilience among retailers offering value-for-money essentials, the nice-to-have items which are John Lewis’ bread and butter have been dropping out of shopping baskets.
‘Waitrose, in particular, has been sideswiped by the trend. Shoppers have been putting less in their trollies and decamping to cheaper stores.’
Senior consultant at Retail Economics, Josh Holmes, said: ‘These results are worse than expected, with both Waitrose and John Lewis seeing profits retrench as inflation sends costs spiralling.
‘The retailer must ensure that it doesn’t lose sight of what made them great in the first place – quality, customer service, and an aspirational brand image.
Putting cost-cutting at the forefront of the company agenda could undermine these values and risks losing further ground to competitors.’
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