John Lewis axes staff bonus for first time since 1953 after losing £635m in six months and closing eight stores
- Chairman Dame Sharon White told partners announcement ‘will come as a blow’
- She said company expect to pay out bonus again once its profits exceed £150m
- The retail group plunged to £635m pre-tax loss for the six months up to July 25
- Shops’ contribution of every £10 spent online thought to have dropped by 50%
John Lewis has axed its staff bonus for the first time since 1953 after losing £635million in six months and closing eight stores.
Dame Sharon White, chairman of the retail group, told partners today that the announcement ‘will come as a blow’.
The group said it plunged to the pre-tax loss for the six months up to July 25 after being impacted by a £470million write-down on its stores.
It added that, before the crisis, it was believed shops contributed about £6 of every £10 spent online – but now that figure is thought to be, on average, around £3.
The group said it plunged to the pre-tax loss for the six months up to July 25. Pictured: a John Lewis shop in Birmingham’s Grand Central Station, which is due to close
Dame Sharon said the company, outside of exceptional circumstances, would now expect to pay out a bonus again once its profits exceed £150million.
Sales across the group increased by 1.1 per cent to £5.56billion for the half-year, but the company saw higher sales of ‘less profitable lines such as laptops and loo rolls’.
However, it also benefited from Government subsidies and expects the business rates holiday for the current year to offset pandemic-related costs by around £50million.
John Lewis saw total sales slip by 10 per cent for the period, as online growth partially offset the impact of store closures.
Online sales were ‘strong’ with 73 per cent growth during the period, Dame Sharon said.
The department store business has seen sales momentum ‘starting to build’ since reopening sites, with sales around 30 per cent lower than the same period last year, but ahead of expectations.
The retail group’s chairman, Sharon White, above, told partners today that the announcement ‘will come as a blow’
It said stores in retail parks are down by around 15 per cent with city centre sites particularly impacted by a slump in footfall, with London stores reporting a 40 per cent slump.
The company added that a shift towards increased home working has impacted people’s purchases, with increased sales of tablets and TVs, while trouser sales have fallen.
Meanwhile, the group’s Waitrose grocery business saw like-for-like sales increase by almost 10 per cent for the period as shoppers continued to go to supermarkets.
It said online shopping demand has remained strong with the company now delivering around 170,000 weekly orders, up from around 60,000 before the pandemic.
Waitrose.com has also seen a ‘strong pick-up in demand’ since ending its delivery partnership with Ocado at the start of September.
The retailer also said it has plans to add 25 more locations to its rapid-delivery trial with Deliveroo as it continues to expand its online proposition.
Dame Sharon said: ‘The pandemic has brought forward changes in consumer shopping habits which might have taken five years into five months.
The department store business has seen sales momentum ‘starting to build’ since reopening sites, with sales ahead of expectations. Pictured: a John Lewis store in Birmingham
‘Both brands entered the crisis with strong and established online businesses and in the case of Waitrose, plans for expansion well under way in preparation for the end of the relationship with Ocado.
‘Our digital businesses have been key to underpinning our first-half performance.’
She also told staff that the company’s new strategy is ‘taking shape’ and will reveal more details next month.
The update comes a day after the group revealed plans to shut four of its Waitrose supermarket stores, with the loss of 124 jobs.
In July, it also announced the closure of eight John Lewis stores, in a move which put 1,300 jobs at risk.
Waitrose will close four supermarkets with loss of 124 jobs – but one store will reopen as a Tesco
Waitrose has revealed plans to close four of its supermarkets, with the loss of 124 jobs – but one will be reopened as a Tesco in 2021.
The grocery chain said it will shut its Caldicot, Ipswich Corn Exchange and Shrewsbury sites, and sell its Wolverhampton store to rival Tesco.
It said it made the decision to shut the branches after it struggled to make them ‘profitable in the long-term’ after a period of ‘challenging trading’.
The Caldicot, Ipswich and Shrewsbury stores will close on December 6.
Three Waitrose stores will be shut while one will be sold on, together with staff, to Tesco
Waitrose said 124 staff at the three stores will face redundancy and will now enter into consultations.
Meanwhile, all 140 staff at the Wolverhampton store, which will shut on December 31, will be transferred to Tesco as part of the sale.
Berangere Michel, executive director of customer service for the John Lewis Partnership, said: ‘Closing any of our shops is always a last resort and is not a reflection on the dedication of our partners in Caldicot, Ipswich Corn Exchange, Shrewsbury and Wolverhampton.
‘Sadly, we have not been able to find a way to make these shops profitable in the long-term, despite the hard work of everyone involved.
Wolverhampton’s Waitrose (pictured) will be closed but its staff taken on by Tesco
‘Our priority now is the wellbeing and future of our partners in these shops.
‘We will do everything we can to support them and explore opportunities wherever possible for those who may wish to remain with the partnership.’
Parent business John Lewis Partnership had said in July that it could close more of the supermarket arm’s outlets as part of cost-saving measures.
The group previously announced the closure of eight John Lewis retail sites, which put 1,300 jobs at risk, as part of its turnaround efforts.