JOHN Lewis staff are expected to see their annual bonus slashed next week when the department store chain unveils a sharp drop in full year profits.
The partnership, which includes upmarket supermarket Waitrose, warned in January that it might have to axe the renowned payout for the first time in 65 years as it battles challenging trading conditions.
Even if the bonus is reduced rather than axed on Thursday, it will represent the sixth year in a row that the firm’s 83,000 workers have had to stomach a cut.
Independent retail analyst Nick Bubb said: “They could still afford to pay a 3% bonus – which would cost circa £45 million – but they have softened the staff up for nothing.”
Outgoing chairman Sir Charlie Mayfield said in January that the board will need to consider carefully whether “payment of a bonus is prudent in the light of business and economic prospects”.
Not only is the partnership coming under intense pressure as consumer confidence takes a knock from Brexit worries and higher costs, Waitrose will also next year lose its near-two decade long contract with Ocado.
It comes as the online grocer instead embarks on a partnership with supermarket Marks & Spencer.
“We are in a very unusual economic and political circumstances,” Sir Charlie said at the time.
He added: “ It all comes down to a judgment on what is best for the partnership.
“No one is getting rid of the bonus, bonuses go up and down.
“It’s affordable but the board needs to decide if it’s prudent.”
The bonus announcement will come alongside what is set to be poor set of full year financial figures.
Numbers crunched by Bubb show that the partnership could be set to suffer a 40% plunge in annual pre-tax profits to £172m.
When accounting for exceptional items, that figure could be dragged lower still.
Bubb is pencilling in a 40% fall in operating profits at John Lewis to around £140m.
Waitrose is tipped to be a bright spot, with operating profits set to grow from £172m to just under £200m.
Getting their bonus – which was first paid in 1920 and is handed to all staff from shelf stackers to senior managers – is usually a belated Christmas present for staff.
The payout has not been withheld since the postwar economic downturn of 1953, when rationing was still in place.
The staff bonus peaked at 24% of salary in the 1980s but last year it was down to just 5%, the lowest level since the 1950s.
John Lewis & Partners started trading in 1864 from a store on Oxford Street, London, and is known for its “never knowingly undersold” promise to match the lowest price for goods charged by any local competitor.
The partnership operates 48 John Lewis shops and 349 Waitrose supermarkets and is owned by its staff, or members, who receive the bonus.
The news is the latest blow to the UK’s high street retailers who axed nearly 150,000 jobs last year.
Figures for 2018 compiled by the Centre for Retail Research show that 148,132 jobs have been wiped out as almost 20,000 shops and restaurants closed their doors.
Several retailers including Asda, House of Fraser and Evans Cycles are expected to cut jobs in 2019.
Other jobs at risk include those at Laura Ashley, Debenhams, Pets At Home and Ikea which unveiled plans to cut 350 UK jobs over the next two years as part of a global transformation plan.
Why are you making commenting on The National only available to subscribers?
We know there are thousands of National readers who want to debate, argue and go back and forth in the comments section of our stories. We’ve got the most informed readers in Scotland, asking each other the big questions about the future of our country.
Unfortunately, though, these important debates are being spoiled by a vocal minority of trolls who aren’t really interested in the issues, try to derail the conversations, register under fake names, and post vile abuse.
So that’s why we’ve decided to make the ability to comment only available to our paying subscribers. That way, all the trolls who post abuse on our website will have to pay if they want to join the debate – and risk a permanent ban from the account that they subscribe with.
The conversation will go back to what it should be about – people who care passionately about the issues, but disagree constructively on what we should do about them. Let’s get that debate started!
Callum Baird, Editor of The National
Comments: Our rules
We want our comments to be a lively and valuable part of our community - a place where readers can debate and engage with the most important local issues. The ability to comment on our stories is a privilege, not a right, however, and that privilege may be withdrawn if it is abused or misused.
Please report any comments that break our rules.
Read the rules here