Advertisement

John Lewis warns staff face signifcant bonus cut despite sales rise

John Lewis and Waitrose workers face a cut in their annual bonus this year despite an upturn in Christmas sales - as the retailers face a turbulent period ahead.

Both brands are part of the employee-owned John Lewis Partnership, which last year awarded a bonus pool of £145m to its 91,500 staff - or more than £1,500 each.

They were among retailers reporting strong festive trading updates on Thursday.

But industry figures from Kantar Worldpanel painted a gloomier picture, reporting a 2% fall in the UK fashion market last year - the deepest decline since the financial crisis in 2009.

The John Lewis Partnership said the sector was under pressure from a shift to online shopping and the fall in the pound.

It said: "Strong Christmas trading, and the likelihood of higher reported profits, risk overshadowing the importance the board is placing on the challenging market outlook…

"The precise level of the bonus will be decided as usual in March, but, in view of these factors, it is likely to be significantly lower than last year."

Like-for-like sales were up 2.7% at department store John Lewis and by 2.8% at supermarket Waitrose for the six weeks to 31 December.

John Lewis saw peaks on Black Friday, in the run-up to Christmas, and in clearance sales while consumers continued to shop online with mobile sales up 81%.

Waitrose said it saw a 21% rise for its premium products while shopper visits were driven by promotions on Christmas staples such as crackers and champagne.

Sir Charlie Mayfield, chairman of the John Lewis Partnership, said headline annual profits were expected to be higher but trading profits were under pressure.

He said: "This reflects the greater changes taking place across the retail sector.

"We expect those to quicken, especially in the next 12 months as the effects of weaker sterling feed through."

The slump in the pound - down 19% since the Brexit vote in June - is squeezing retailers as they try to keep prices down amid a fiercely competitive market.

Tesco (Frankfurt: 852647 - news) , Britain's biggest supermarket, also acknowledged the pressure caused by the collapse in the currency as it published its latest trading update.

Elsewhere in the retail sector there was Christmas cheer with M&S like-for-like home and clothing sales up 2.3% and Debenhams (Frankfurt: D2T.F - news) reporting a 3.5% rise in the 18 weeks to 7 January, including 1% growth for the UK.

Primark owner Associated British Foods (LSE: ABF.L - news) said the fashion brand's sales were up 23% in the 16 weeks to 7 January, partly because of sterling weakness boosting the value of international sales.

UK like-for-like sales growth was "good" but a figure was not disclosed.

Other fashion retailers with global operations including Superdry owner Supergroup (Frankfurt: 49S.F - news) and online platform ASOS (LSE: ASC.L - news) also performed strongly and saw a boost from a fall in the pound.

Outside the clothing sector, online electrical retailer AO World (Frankfurt: A1XEN9 - news) said UK sales rose 10.3% in the third quarter to the end of December but it remained cautious over the economic outlook.

Mothercare (Other OTC: MHCRF - news) saw UK like-for-like sales grow 1% in the 13 weeks to 7 January following a struggle in previous months.