The John Lewis Partnership has confirmed that it’ll ditch the annual bonus for its 74,000 workers subsequent yr after it sank again into the crimson.
The worker-owned group posted a loss earlier than distinctive objects and tax of £78 million for the yr to January 28, down from a revenue of £181 million final yr. Analysts had forecast a smaller lack of £50 million.
The partnership, which contains John Lewis department shops and Waitrose supermarkets, blamed its efficiency on inflationary pressures, property write downs, provide chain challenges and a hearth in considered one of its warehouses.
It stated that the influence of inflation added £179 million to its prices within the yr. Including in distinctive prices, the most important one being a write down within the worth of Waitrose retailers, the loss was £234 million.
Complete gross sales have been down 2 per cent to £12.25 billion as its buyers additionally “felt the ache of inflation”; Waitrose gross sales have been down 3 per cent to £7.31 billion and John Lewis gross sales have been up 0.2 per cent to £4.94 billion.
The partnership stated that the massive on-line progress of the pandemic years had been “partly reversed” and admitted that its buyers had shifted a few of their grocery spending to the discounters.
Dame Sharon White, its chairman, stated: “Inflation has had a big effect on the partnership and despatched our prices hovering . . . it is usually the case that we had some setbacks. Product provide challenges and a significant fireplace in our Brinklow warehouse hit availability in Waitrose final summer time.
“All in all, this has made for a troublesome set of outcomes. I’m sorry that the loss means we received’t be capable of share a bonus this yr or do as a lot as we wish on pay.”
The final time the bonus was axed totally was in 2020, the primary time since 1948, after the partnership posted a half-year loss following a battering from the pandemic. Final yr the 2021-22 bonus was 3 per cent of an worker’s pay.
The corporate stated it ended the yr with a stability sheet of £1 billion, borrowings of £650 million and complete web debt of £1.7 billion.
Yesterday it appointed Nish Kankiwala as its first chief government as a part of a shake-up of its administration construction to assist to “supercharge” its current transformation plan. Kankiwala, a non-executive director on the retailer since April 2021, beforehand served as chief government of Hovis and held senior roles at Burger King and PepsiCo.
The transfer got here after Pippa Wicks, who was introduced in by White as government of John Lewis to revive the model’s fortunes in 2020, left the enterprise this month with out giving a motive. She was succeeded by Naomi Simcock, its retail director, on an interim foundation.
The enterprise has been struggling for quite a few years. Earlier than the pandemic shutdown on the excessive road in 2020, cut-throat on-line competitors and years of declining earnings had put the partnership’s enterprise mannequin beneath menace.
It pressured White to order a turnaround of the enterprise in October 2020. Her five-year restoration plan, which goals to attain annual earnings of £400 million by 2025, has concerned chopping down a 51-strong John Lewis department shops portfolio to 34. Different cost-cutting measures have included making hundreds of workers redundant.
Final yr Waitrose, the market share of which has slumped up to now two years, employed the American consultancy Bain & Firm to assist it to be extra environment friendly and to cut back prices with the intention to make investments elsewhere within the supermarkets, together with a possible revamp of the 332-strong property.
The partnership additionally has began to dump different elements of the broader enterprise in a bid to spice up its money stability, together with promoting its Winter Hill Golf Membership in Berkshire.