Staff working for the John Lewis Partnership will not receive a bonus for the third year in a row despite the supermarket and department store operator reporting a jump in annual profits.
Over the year to 25 January, the group posted a 73% increase in pre-tax profit to £97m on sales up 3% to £12.8bn. Before exceptional items, the profit figure tripled to £126m.
The Partnership’s performance was driven by its Waitrose division, which saw sales increase by 4.4% to £8.0bn. The group noted that volumes were up 2.6% after investment in improving its product offering, availability and price competitiveness paid off.
The supermarket chain’s adjusted operating profit jumped £122m to £227m after productivity improvement helped margins double to 3.0%.
Meanwhile, sales in the John Lewis business were flat at £4.8bn. However, the group noted that this was ahead of the market with “momentum building” across the year. Adjusted operating profit came in at £45m, with the group highlighting the steps taken to improve the department store’s performance, including bringing back its price promise, improving customer service, and introducing better product ranges.
Chairman Jason Tarry, the former Tesco executive who succeeded Dame Sharon White in September, commented: “These are solid results, which show that our customers are responding well to our investments.”
Looking ahead, the Partnership said it expected the macroeconomic environment to continue to be “challenging” for consumers and the business. However, it stressed it was “confident in our strategy”, with improved cash generation and stronger liquidity, allowing it to invest a planned £600m in the year ahead on “improving the customer experience” through store refurbishments and openings, technology upgrades and supply chain modernisation.
The company concluded: “We are making solid progress and have much more to achieve. By relentlessly focusing on our customers’ needs, delivered by our brilliant Partners, we will pursue the headroom for growth that exists in our retail brands. We expect to see a further increase in profitability in 2025/26.”
However, the Partnership stated that it did not believe “it would be right” to pay a bonus for last year as it continues to reinvest to revive its fortunes and after it announced it would increase pay by a total of £114m this year following £116m hike in 2024. The last time it paid a bonus was for the year to January 2022.
Charles Allen, a Bloomberg Intelligence analyst, said the lack of bonus “had been signalled”.
He added: “I also think we have to put in the light of another big pay raise that’s coming through in line with the minimum wage jump. And then, of course, although the partners don’t see it, you’ve got a very large rise in employer National Insurance as well.”
NAM Implications:
- An enviable turnaround with plenty of momentum in play…
- …due in part to a motivated team?
- Time will tell re the consequence of the missed bonus.
- Fingers crossed…
