John Lewis has axed its staff bonus for the third year in succession despite making its biggest profits since 2022.
Bosses at Britain’s highest profile partnership, which runs John Lewis department stores and the Waitrose supermarket chain, said they had decided to prioritise an increase in regular pay, which is going up by 7.4% this year, and £600 million of investment over a bonus.
Partners have not received a bonus for four out of the last five years, a period when the business has struggled with heavy losses, the impact of the pandemic lockdowns and the cost of living crisis.
The last bonus was a 3% distribution for the 21/22 financial year when the partnership made a pre-tax profit of £181 million.
Underlying pre-tax profits for the year to the 25 January tripled from £42 million to £126 million, the highest for three years, on sales of £12.8 billion, up 3%.
Chairman Jason Tarry, a former senior Tesco executive who replaced Dame Sharon White last year, described the results as “solid” but said there was “much more still to do.”
He said the decision to not pay a bonus had been “difficult” but had been taken because of the need to restore base pay to competitive levels and invest in technology.
He said “in an ideal world” the business would pay a bonus as well as a pay rise and the it was “determined” to bring back the bonus as soon as conditions allow.
The business will face a £45 million increase in costs in the current year as a result of the rise in employer National Insurance contributions.
Waitrose adjusted operating profit more than doubled to £227 million on sales up 4.4% at £8 billion.
John Lewis made operating profits to £45 million on unchanged sales of £4.8 billion. The first half saw a 3% decrease in sales and a £24 million drop in profit due to investments in growth. A “marked improvement” in the second half led to a 3% increase in sales and £8 million growth in profits.
Tarry said: “These are solid results, which show that our customers are responding well to our investments in quality products, value and service. We have made good progress with much more still to do. “
John Lewis operates 34 shops across the UK as well as johnlewis.com. Waitrose has 315 shops in England, Scotland, Wales and the Channel Islands, including 47 convenience branches, and another 29 shops at Welcome Break locations.
Julie Palmer, partner at consultants Begbies Traynor, said:“It is encouraging to see profits rebound at JLP after years of slow momentum. However, there remains a long road ahead if the retailer is to win back the market share it lost to M&S and other rivals in the battle for Middle England’s consumers.
“New chair Jason Tarry is certainly sounding the right notes. The opening of new Waitrose stores, the reintroduction of John Lewis’s ‘Never Knowingly Undersold’ guarantee and an inflation-beating £114m investment into staff pay, should all bode well for the partnership.”
