John Lewis eliminates the bond for the first time since 1953

John Lewis has confirmed that staff will not receive a bonus for the first time since 1953 after it was hit by store closures.

The retailer, which also owns Waitrose, posted a huge pre-tax loss of 635 million pounds for the six months to July 25, after higher costs offset a 1% increase in sales.

Its president told staff on Thursday that the announcement “will come as a hit.”

Even before Covid-19 hit, the chain had warned that it might not pay the usual bonus to staff as the competition ate the profits.

The group’s loss in the first half was 635 million pounds once exceptional items were taken into account, including a reduction of 470 million pounds in the value of its stores.

Excluding those one-time costs, the group’s loss in those six months was 55 million pounds.

The last time the chain, which operates as a company, decided not to pay a bonus to its staff was after World War II.

President Dame Sharon White said, “We managed to get even stronger and we will do it again.”

She added: “I know this will be a blow to the partners who have worked so hard this year. The decision in no way detracts from the commitment and dedication they have shown.”

Bonus payments will only resume once annual earnings exceed £ 150 million and debt decreases, he said.

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The retailer said that store closures during shutdown and customers buying less profitable items, such as toilet paper or laptops, have affected commerce.

He estimated that in its first half, John Lewis stores saw a £ 200 million drop in sales, while the broader group saw additional coronavirus-related costs totaling £ 50 million.

But in a statement, it said its Waitrose supermarkets had seen “a return to the store weekly,” with like-for-like sales up 10% year-on-year.

A ‘huge’ loss

John Lewis has had a huge loss for half a year. But it was mainly due to some large one-time costs, including a £ 470 million impairment charge against the value of his department stores, reflecting the fact that his property is not making as big of a contribution as it used to.

Before the crisis, stores contributed around £ 6 of every £ 10 spent online. John Lewis now thinks the figure is closer to £ 3. They have closed eight John Lewis stores, which has cost the company another £ 105 million.

These results reveal the impact of the pandemic. But the company says this is better than it expected in April. John Lewis makes most of his profits in the second half of the year. Christmas is key. With the outcome still highly uncertain, he now believes the most likely outcome is a “small loss or a small gain” for the entire year.

Change shopping habits

Dame Sharon said that the pandemic had caused changes in consumer buying habits “that could have taken from five years to five months.”

At John Lewis stores, online sales increased 73% in the six months to July 25, “helping to offset the impact of store closures.” They now account for more than 60% of the department store chain’s total sales, up from 40% before the pandemic.

The group added that a shift towards more home work had affected people’s purchases, with sales of tablets and televisions rising, while sales of pants had declined.

The chain also said Waitrose was delivering about 170,000 weekly grocery orders, compared to 60,000 before closing, and demand had increased since it ended its association with online grocery store Ocado in August.

However, after having struggled to manage competition from online rivals and reduce consumer spending, the group recently announced plans to close stores.

In July, it said it would close eight John Lewis stores, in a move that put 1,300 jobs at risk. And this week it announced that it would close four of its Waitrose supermarkets, with the loss of 124 jobs.

It also recently removed its famous “never knowingly under-sold” price commitment, which had been in place since 1925. The commitment never applied to Internet-only retailers, which have lower costs and often markdowns. the High Street price.

Looking ahead, Dame Sharon said the outlook for the second half was “clearly uncertain” given the broader coronavirus crisis.

He also stressed that the Christmas business period would be “particularly important to earnings” for the group.

On Thursday, John Lewis also confirmed that he had opened his Christmas shop earlier this year. Sales of Christmas trees and ornaments were up “remarkably” from last year, he said.