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 includes John Lewis malls and Waitrose supermarkets, blamed its efficiency on inflationary pressures, property write downs, provide chain challenges and a hearth in one among its warehouses.
It mentioned that the affect of inflation added £179 million to its prices within the yr. Including in distinctive prices, the largest one being a write down within the worth of Waitrose retailers, the loss was £234 million.
Complete gross sales had been down 2 per cent to £12.25 billion as its consumers additionally “felt the ache of inflation”; Waitrose gross sales had been down 3 per cent to £7.31 billion and John Lewis gross sales had been up 0.2 per cent to £4.94 billion.
The partnership mentioned that the large on-line development of the pandemic years had been “partly reversed” and admitted that its consumers had shifted a few of their grocery spending to the discounters.
Dame Sharon White, its chairman, mentioned: “Inflation has had a big effect on the partnership and despatched our prices hovering . . . it’s also the case that we had some setbacks. Product provide challenges and a significant hearth 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 gained’t be capable of share a bonus this yr or do as a lot as we want 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 mentioned it ended the yr with a steadiness 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 govt 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 govt 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 govt 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 lot of 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 compelled 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 malls portfolio to 34. Different cost-cutting measures have included making 1000’s of employees redundant.
Final yr Waitrose, the market share of which has slumped previously two years, employed the American consultancy Bain & Firm to assist it to be extra environment friendly and to scale back prices in an effort 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 components of the broader enterprise in a bid to spice up its money steadiness, together with promoting its Winter Hill Golf Membership in Berkshire.