The treasured annual John Lewis Partnership bonus has been cut to its lowest in 12 years after the supermarket price war caught up with Waitrose.
Although the partners — staff — thronged the escalators of the John Lewis department store on Oxford Street in London for the announcement and the choir sang hits from the Christmas adverts, they left with a bonus that fell from 15 per cent of salary last year to 11 per cent this year.
Sir Charlie Mayfield, the chairman, tried to put the cut in the context of its 150-year history, saying the bonus had been as high as 24 per cent and as low as 8 per cent, and that the £156.2 million bonus pool was the equivalent of almost six weeks’ pay.
The damage was done by Waitrose where profits fell 23.4 per cent to £237.4 million in the year to January 31, as the upmarket grocer was hit by falling prices, forced lower by the fierce battle across the industry for market share, and investments in IT, new stores and technology to keep up with changing shopping habits.
Waitrose managed to boost annual like-for-like sales by 1.4 per cent at a time when the big grocers have been losing trade. However, in the first five weeks of its new financial year, sales were down 2.8 per cent.
Advertisement
Mark Price, managing director of Waitrose, said he was “undoubtedly” facing the biggest challenge of his 34 years at the partnership, but expected like-for-like sales to return to growth this year, “all other things being equal”.
He said the future for Waitrose was uncertain amid “dramatic” changes in food retailing as customers shop online, at convenience stores and eat out more. This has been compounded by food deflation, he added.
The outlook at John Lewis was brighter. Operating profit rose 10.8 per cent to £250.5 million. The department store enjoyed its best performance in homewares since the financial crash and fashion sales were up 8.3 per cent, or 32 per cent online.
Across the group, profit before bonus, tax and exceptional items was down 9 per cent to £342.7 million.