John Lewis bonuses set to be cut


Published: Thursday 12th March 2015 by The News Editor

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Bonuses paid to 90,000 John Lewis and Waitrose staff look set to be cut for the second year running today as profits are hit by the supermarket price war.

John Lewis Partnership, which is owned by employees of the two retail chains, is expected to slash the pay-out from 15% a year ago to between 10% and 14%. It had been 17% the year before.

Analyst Nick Bubb expects pre-tax profits before exceptional items at the group to fall from £376 million to between £345 million and £350 million, a drop of 7-8%.

He said: “Given the weak start to the new year seen at Waitrose, it would not be surprising to see the JLP board err on the side of caution and announce an annual partnership bonus that is well down on last year’s 15% payout.”

Mr Bubb expects the supermarket will see operating profits fall from £310 million to £240-£245 million, despite modest like-for-like sales growth, with margins squeezed by the intense promotional environment in the industry.

Operating profits at John Lewis look set to have risen from last year’s underlying £242 million but are unlikely to top the £250-255 million mark – a rise of 3-5% – despite like-for-like sales predicted to have risen by 7%, Mr Bubb said.

He added: “The key issue with John Lewis is that nearly all the sales growth came from online, with all its extra fulfilment costs, both before and after the discounting frenzy of Black Friday.”

Latest industry data from Kantar Worldpanel this week showed sales up 4.9% at the high-end supermarket for the 12 weeks to March 1, compared with the same period last year, as market share grew from 5% to 5.2%.

But Kantar said it was “selling more products on promotion than it has done historically, in an effort to be more price competitive”.

Latest figures from Waitrose show sales excluding petrol up just 0.3% for the four weeks to February 28. Mr Bubb said on a like-for-like basis they were 4% lower.

Department store John Lewis revealed in January that like-for-like sales grew 4.8% over the Christmas period – five weeks to December 27 – but relied on internet purchases for growth with store sales around 1% lower.

Its total sales in the four weeks to February 28 were up 4.8%.

Published: Thursday 12th March 2015 by The News Editor

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