John Lewis advise it may not compensate staff bonus

Retail group John Lewis Partnership has warned its staff bonus may be doubtful as it reported a fall in festive gross sales at its division retailer chain.

It warned that annual partnership income have been anticipated to be “substantially down on last year”.

The board will meet in February to resolve if it is “prudent” to pay the staff bonus, the partnership mentioned. In a shock announcement, John Lewis & Companions additionally mentioned its managing director Paula Nickolds will step down. The partnership has been combining the chief groups behind John Lewis and Waitrose into one workforce, and she or he was anticipated to change into government director of brand name subsequent month when the groups merged. John Lewis mentioned: “After some reflection on the responsibilities of her proposed new role, we have decided together that the implementation of the future partnership structure in February is the right time for her to move on.”

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Ms Nickolds was the primary lady to change into managing director of the partnership, having labored her method up after becoming a member of as a graduate trainee in 1994. She is going to depart the partnership subsequent month.

‘Views change’

There might be one other massive change on the prime of the partnership in February, when prime civil servant Sharon White will take over as chair. Outgoing chairman Sir Charlie Mayfield mentioned the choice for Ms Nickolds to step down was taken by each of them. “Paula has been a brilliant leader of this business for many years,” he mentioned. “We decided together now is the time to step away.” Ms Nickolds had been a rising star within the enterprise. When requested about what had modified between October and January, Sir Charlie mentioned: “Issues change. Folks’s needs, folks’s views change. “My perspective is that what we’ve done and what we’re doing is the right thing to do.”

Bonus warning

The choice on whether or not or not to pay the normal staff bonus, which might be taken by Ms White, might be “influenced by our level of profitability, planned investment and maintaining the strength of our balance sheet”, the partnership mentioned. The John Lewis Partnership is owned by its staff, who’re often called companions. The final time that staff did not obtain a bonus was in 1953. Nevertheless, whether or not or not it could be paid was doubtful final 12 months. In March 2019, the partnership reduce the bonus after a plunge in income. John Lewis warned that this time round, full-year income would possibly not be sufficient for it to pay out any bonus. The partnership fell to a loss within the first half of 2019, as it warned of “difficult” buying and selling circumstances and “subdued consumer confidence”. It mentioned on Thursday that it would reverse these losses, however it warned that income would nonetheless be “substantially down” on the earlier 12 months. Sir Charlie mentioned that income had been hit “because we are price competitive, because we match prices”. John Lewis has a value comparability promise enshrined in its “never knowingly undersold” slogan, which commits it to matching the costs of Excessive Road rivals, however not these of online-only rivals. Buying and selling circumstances are robust for the time being, he mentioned. “Sadly, you possibly can’t select the climate. When the climate is okay, you make hay – and we did. “You have to use the winter to sow the seeds for the next harvest.”

Festive gross sales

Christmas gross sales at John Lewis shops have been down 2% on a like-for-like foundation, the partnership mentioned. Gross sales in its house and know-how departments have been weak, down 3.4% and 4% respectively within the seven weeks from 17 November to Four January. However it mentioned magnificence division gross sales have been up 4.7% and Black Friday division retailer gross sales jumped 10%. On the identical time, Waitrose gross sales rose 0.4%, which Sir Charlie described as “a good sales performance” in a “weak grocery market”. Julie Palmer, a accomplice at Begbies Traynor, mentioned the outcomes have been “a huge dent to John Lewis’ recovery plans”. “A company that was once placed on a pedestal as the future of retail by government and analysts has had its legs taken from under it, leaving it stumbling battered and bruised into 2020,” she mentioned. The “never knowingly undersold” promise “continues to erode margins as it seeks to compete on price with competitors that have leaner operations and lower overheads”, she mentioned. “The rules of this promise may need to be reviewed and renewed if the retailer is to start turning around, and a savvy operator with Treasury experience like Sharon White may be just the kind of mind needed to do it,” Ms Palmer added.

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