John Lewis cuts staff bonus as profits plunge

John Lewis cuts staff bonus as profits plunge

John Lewis cuts staff bonus as profits plunge

Investments during the year included in-store improvements at 127 branches, as well as investment in the website to improve the online grocery operation, which saw sales growth of 10.9 per cent.

Sir Charlie Mayfield, chairman of the John Lewis Partnership, pointed to "subdued" consumer demand during a challenging year which also saw a costly shake-up including 1,440 redundancies.

Staff still on board after the latest round of redundancies will be handed a bonus of five per cent of annual salary, with 85,500 partners sharing out a pot worth £74 million, down from £89.4 million the previous year.

John Lewis Partnership, which is owned by the employees of the two retail chains, had already warned in January that annual profits would be hit amid attempts to remain competitive despite facing cost pressures from the weak pound.

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"We have seen margins coming under pressure, and in fact, if anything, they came under more pressure probably than we had anticipated", he told reporters at a press conference.

John Lewis's poor end of year results reflect the hard times afflicting the United Kingdom retail sector, which is having to cope with weak consumer sentiment as well as currency swings following the UK's vote to leave the European Union.

John Lewis Partnership chairman Charlie Mayfield on Thursday blamed falling disposable income, a lack of activity in the housing market and the negative impact of Brexit on consumer sentiment for Britons reining in their spending.

Sir Charlie added: "We said in January 2017 that we were preparing for tougher trading conditions, with weakness in sterling feeding through into cost prices".

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"We expect trading to be volatile in 2018/19" the company reports, with continuing economic uncertainty and no let up in competitive intensity.

"This was why we chose to reduce the proportion of profits paid as Partnership Bonus past year so as to absorb these impacts while continuing to invest in the future and in strengthening our balance sheet". Waitrose recorded 2.4% growth in like-for-like sales, excluding fuel, and John Lewis same store sales were down 3.4%. But home sales fell by 0.8%, with lower demand for upholstery and fitted flooring and furniture.

John Lewis Partnership has reported that its gross sales for 2017 were up 2% at £11,597.7m, but profits were down 21.9% at £289.2m.

"We did both and I am pleased to say that despite lower profits, strong cash flow has enabled us to reduce our total net debts".

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