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The John Lewis Partnership has confirmed that it will not pay a staff bonus next year after posting a £ 635 million loss over half a year.
It is the first time in more than 60 years that workers in the employee-owned company will not be paid, which was last phased out in 1948 after WWII and remained at zero until 1953.
The association, like other retailers, has been hit by the pandemic, eliminating more than a thousand jobs by closing some stores for good.
Dame Sharon White said JLP would overcome the crisis to be ‘stronger than before’
Its John Lewis department store chain suffered a 10% drop in sales during the six months to July, in contrast to the company’s supermarket business, Waitrose, where sales increased nearly 10%.
Dame Sharon White, president of JLP, said her worst case scenario remained a 5% drop in sales at Waitrose and a 35% drop at John Lewis for the full year with the most likely result of a “small loss or a small profit “.
The partners had already been warned in April that they were unlikely to see a bonus in 2021 and Dame Sharon said the board had now confirmed “that there will be no bonus next year given our earnings outlook.”
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 it has shown.
“The association found itself in a similar situation in 1948 when the bonus stopped after World War II.
“We passed then to be even stronger than before and we will do it again.”
Dame Sharon said that “outside of exceptional circumstances”, JLP would expect to start paying a bond again once earnings exceed £ 150 million and debt falls and that once earnings exceed £ 300 million it would expect the bond to be at least 10% of salary.
JLP has been cutting its generous staff bonuses, which stood at 17% in 2013, in recent years, with a cut this year to 2%.
But so far it has avoided removing the payment entirely.
The association said that overall, by including both John Lewis and Waitrose, sales were up 1%, but buyers spent more on “less profitable lines, like laptops and toilet rolls.”
John Lewis saw a huge impact on working from home, with more TVs and tablets and fewer pants and sneakers.
There was also a split between park retail stores, where sales fell 15%, and city centers, especially London, where sales fell 40%.
JLP reported an underlying loss of £ 55 million, better than previously expected and around the same time last year.
But it also reported large one-time costs, including a £ 470 million reduction against the book value of its department store network, due to the large shift in demand from traditional to online retail.
Dame Sharon said that before the pandemic, in-store sales were thought to account for £ 6 for every £ 10 spent online, but had now dropped to £ 3.
The large write-off to account for this led the business to a total loss of £ 635 million.
The results of both parts of the business illustrated the move away from brick-and-mortar stores, with John Lewis’ internet sales rising 73%, while Waitrose.com saw a “strong rebound in demand” following the end of the tie. from the supermarket with Ocado.
Waitrose is now delivering about 170,000 weekly orders online, up from 60,000 before the pandemic, and with a capacity set to expand to 250,000 in the coming months, JLP said.
