Published on March 8th, 2018 | by The GC Team0
John Lewis cuts staff bonus as profits fall
Staff at the John Lewis Partnership will receive a 5% bonus, down from 6% last year, the retailer said today as it reported profit before Partnership Bonus, tax and exceptional items down 21.9% to £289.2m.
The fall was largely due to lower gross margins at Waitrose, driven by the weaker exchange rate and commitment to competitive pricing.
Gross sales at the Group rose 2.0% to £11.60bn.
Gross sales at the John Lewis multi-channel business rose 2.2% to £4.84bn, with like-for-like sales growth of 0.4%. Operating profit before exceptional items was £254.2m, up 4.5%.
Electricals & Home Technology sales rose 2.6%, with connected home and wearable technology as key categories. Voice controlled technology also saw a significant increase.
The retailer said it hosted a number of industry-leading launches, including Microsoft Surface Laptop, the HP Spectre Laptop and the Apple iPhone X, and secured product exclusives with brands including Dyson, Samsung and LG. It also relaunched its own-brand large electricals range.
Commenting on the Group’s results, Chairman Sir Charlie Mayfield stated: “We said in January 2017 that we were preparing for tougher trading conditions with weakness in Sterling feeding through into cost prices, putting pressure on margin, and much higher exceptional costs as a result of an acceleration of planned changes. This was why we chose to reduce the proportion of profits paid as Partnership Bonus last year so as to absorb these impacts while continuing to invest in the future and in strengthening our balance sheet. We did both and I am pleased to say that despite lower profits, strong cash flow has enabled us to reduce our total net debts.”
Looking ahead, Mayfield said: “We expect trading to be volatile in 2018/19, with continuing economic uncertainty and no letup in competitive intensity. We therefore anticipate further pressure on profits.
“However, the Partnership will see benefits this year from the many changes we implemented in 2017/18, and the faster delivery of key innovations. Together these will strengthen our competitive position in 2018.”