Today, John Lewis disclosed that the bonuses of the employees of the department store have dropped to a 55-year low of 3 percent.
This indicates the sixth consecutive annual decline in the bonus pot for employees at John Lewis Partnership, which also includes Waitrose. Last year, the bonus level dropped from 5 percent and it is down from 15 percent 10 years ago.
The bonus cut implies that the 83,000 employees of John Lewis Partnership will share a pot worth £44.7 million, down from the £74 million the previous year.
However, the award is better than expected. Last January, John Lewis released a warning that it might have to axe the renowned payout for the first time since 1953 as it tries to endure challenging trading conditions.
The bonus cut was announced as John Lewis said that its profits crashed by 45.4 percent to £160 million last year. Its sales increased by 1 percent to £11.7 billion.
The group blamed the decline in profit on margin pressure, weaker home sales, the property impact of new shops, lower profits on asset disposals, and higher IT costs.
Sir Charlie Mayfield, the chairman of John Lewis, stated: “In line with expectations set out in June, our partnership profits before exceptionals have finished substantially lower in what has been a challenging year, particularly in non-food.”
He added: “The board has awarded a bonus at 3%. This enables us to continue debt reduction, maintain our level of investment, and retains solid cash reserves to cope with the continuing uncertainty facing consumers and the economy.”
Mayfield warned that he is expecting the conditions to “remain challenging,” however, he said that the firm is “confident in our strategic direction and customer offer across both brands.”
Retailers experienced a brutal end to 2018, with Mike Ashley, the founder of Sports Direct, saying that last November was the “worst on record” and the share price of Asos dropping to nearly 40 percent on a December profit warning.
Today, John Lewis also warned that a hard Brexit could spark “a strong decline in consumer confidence and the effect that would have on trade.” The retailer said that it has been “preparing for the operational implications of Brexit for well over a year” and has “a strong liquidity position at nearly £1.5bn.”
While the flagship John Lewis department stores performed poorly, Waitrose, the supermarket chain of the group, enjoyed a rebound in profits. Its operating profit increased by 18 percent to £203.2 million in 2018 at the upmarket supermarket.