The John Lewis Partnership has broken a four-year hiatus by distributing an annual staff bonus, marking a significant milestone for the employee-owned retail group. This decision comes as underlying profits increased by 6%, driven by a sales rise to £13.4 billion for the year ending 31 January.
Financial Performance and Bonus Details
Employees, referred to as partners within the company, will receive a 2% bonus. This payment follows a period where the partnership had not issued bonuses in four out of the previous five years, largely due to losses during the Covid-19 pandemic when stores were forced to close during lockdowns. Despite tripling profits last year, the company opted against a bonus then, making this year's payout particularly notable.
Challenges and Strategic Shifts
Chair Jason Tarry described the market as "subdued," with profits slightly below expectations. He highlighted that profits were impacted by £40 million in additional national insurance contributions and £13 million in new packaging levies. After accounting for one-offs, including the write-down of old technology, the company reported a pre-tax loss of £21 million, compared to a profit of £97 million the previous year.
The partnership is currently executing a turnaround plan that has involved closing 16 department stores and at least 20 Waitrose outlets, along with cutting thousands of head office jobs. Tarry emphasized that the multi-year investment strategy is yielding results, with growing customer numbers and record satisfaction levels.
Historical Context and Future Investments
During the 1980s, the retailer paid annual bonuses as high as 24% of employee salaries, underscoring how this year's 2% payment represents a more modest but positive step. Internally, the company had hinted at a potential bonus if profits exceeded £200 million, a target that spurred some workers to sign an open letter advocating for its return.
Looking ahead, John Lewis is investing £800 million across its stores, including refurbishing over 20 Waitrose outlets and five John Lewis shops in the past year. Additionally, the partnership has launched the Topshop brand across all 32 department stores to enhance its fashion appeal. In a strategic pivot, Tarry has halted plans to build up to 10,000 rental properties to focus more intently on retail operations.
