John Lewis to cut staff bonus to lowest level since 1954 as annual profits fall by 45.5%
The John Lewis Partnership - which includes John Lewis and Waitrose - said it will reduce the bonus to three per cent of staff's annual salary
STAFF at John Lewis and Waitrose will have their bonuses cut to the lowest level since 1954 after annual profits fell by 45.5 per cent last year.
The John Lewis Partnership - which includes the two retailers - said it will reduce the bonus to 3 per cent of staff's annual salary.
In total, 83,000 partners will now share a pot worth £44.7million, down from £74million the previous year.
It is the sixth consecutive year the bonus has been cut, with the latest figure down from five per cent last year - the lowest payout since 1954 when it was four per cent.
The bonus began in 1920 and was originally paid out in the form of stocks and shares in the company. In 1970 it was converted to the cash bonus staff get today.
Bonuses in the 1970s and 1980s were as high as 24 per cent and as recently as 2013 it was 17 per cent.
The partnership warned in January that it might have to axe the payout for the first time since 1953 as it battled challenging trading conditions.
The bonus cut now came as the group saw annual profits before tax, exceptionals and bonus drop 45.4 per cent to £160million.
Overall revenue rose one per cent to £10.3billion for the period ending January 26, but operating profits were down due to challenges at John Lewis.
Operating profit at the department store fell by 56 per cent to £114.7million due to weaker home sales, tighter margins, higher IT costs and the cost of new shops.
Meanwhile, operating profit at Waitrose climbed 18 per cent to £203.2million.
Chairman Sir Charlie Mayfield said: "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 warned that trading conditions are set to remain challenging in 2019, but that the partnership was "confident in our strategic direction and customer offer across both brands".
Meanwhile, Martin Lane, managing editor of comparison site Money.co.uk, said the 45 per cent drop in profits was "hugely worrying".
He said: "Even the high street elite aren’t immune to the nightmare hitting the retail sector.
"It’s good John Lewis are still price matching their competitor helping consumers to get the best deal, but I do wonder how long they'll be able to soak them up for.
"The pound in our pocket constantly feels like it’s being stretched, making the slowly shrinking bonus even more of a blow for the employees of John Lewis."
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In June last year, Waitrose announced it was shutting five of its stores as John Lewis profits slumped.
John Lewis also came under fire at Christmas after its Quality Street pic’n’ mix ran out of shoppers' favourites.
Meanwhile, Elton John was the star of John Lewis' 2018 Christmas advert, although shoppers slammed it as being "awful".
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