John Lewis axes staff bonus and plans to cut jobs

John Lewis has axed its staff bonus for a second time and signalled job cuts are in the pipeline, after what it described as a "very tough year".

The department store firm, which also owns Waitrose supermarkets, reported a £234m pre-tax loss.

Partnership chair Dame Sharon White said the stores had attracted more customers, but they had spent less.

She said the losses meant bonuses could not be issued this year for the second time since it began the scheme in 1953.

Dame Sharon suggested the firm may have to reduce staff numbers, or "partners" as they are known at the company.

"As we need to become more efficient and productive, that will have an impact on our number of partners," she said.

When questioned about specific plans around job losses Dame Sharon said: "There are no numbers."

But the firm said it faced a "more challenging environment" and was tripling its target to make savings from £300m to £900m by January 2026.

It said savings would be made through the sale of assets, such as its Berkshire golf club, and by improving productivity.

Meanwhile, the plan to move into the residential property market was "working really well" Dame Sharon said.

John Lewis said its long-term aim was for almost half (40%) of profits to come from outside of shops by 2030.

But Dame Sharon said soaring prices last year had "hit us like a hurricane" and that customers had "felt the pain".

Despite Waitrose reporting more shoppers in the year to the end of January, customers spent less. It said the size of the average basket fell by 15% and people were buying cheaper items.

Consequently, full-year sales at Waitrose fell by 3% to £7.31bn.

"The big online growth of the pandemic years was partly reversed," said Dame Sharon, adding: "Shoppers shifted some of their grocery spending to the discounters."

The cost of living crisis has hit John Lewis hard, with worse-than-expected results. Customer numbers may be up but they are buying less, especially at Waitrose, which revealed a drop in volumes of 10% for the year.

The group is also grappling with its own spiralling costs, up by nearly £180m in a year, including higher energy bills and pay. It has already made £300m of savings as part of its existing plans to turnaround the business. Now the firm's chair Dame Sharon White says she wants to save another £600m by 2026. That will likely mean job losses as the business tries to become more efficient.

She has appointed the Partnership's first ever chief executive to supercharge the transformation and get profits back on track. That's not an easy job right now in the current economic environment.

Retail analyst Catherine Shuttleworth said shoppers were "cherry picking what they buy at Waitrose".

The decline in Waitrose sales was significant Ms Shuttleworth said: "Volumes are the life-blood of supermarket businesses - the more you sell, the better the prices you can offer to shoppers.

"One glimmer of hope is that shoppers are back in department stores with sales up 20% - the strategy to invest more in a reduced store network is clearly working especially at seasonal peaks particularly Christmas."

The figures come following recent upheavals within senior management after Pippa Wicks departed as executive director of the department store business.

Nish Kankiwala was appointed on Wednesday as John Lewis' first ever chief executive and will oversee the daily running of the entire business.

It is the third year of pre-tax losses for John Lewis. Last year, it reported a £27m loss, far below this most recent result.