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Retail group John Lewis Partnership has warned its staff bonus may be in doubt as it reported a fall in festive sales at its department store chain. It warned that annual partnership profits were expected to be “substantially down on last year”.

The board will meet in February to decide if it is “prudent” to pay the staff bonus, the partnership said. In a surprise announcement, John Lewis & Partners also said its managing director Paula Nickolds will step down.

The partnership has been combining the executive teams behind John Lewis and Waitrose into one team, and she was expected to become executive director of brand next month when the teams merged.

John Lewis said: “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.”

Ms Nickolds was the first woman to become managing director of the partnership, having worked her way up after joining as a graduate trainee in 1994. She will leave the partnership next month.

The decision on whether or not to pay the traditional staff bonus will be “influenced by our level of profitability, planned investment and maintaining the strength of our balance sheet”, the partnership said.

The John Lewis Partnership is owned by its staff, who are known as partners, and the bonus has been paid since 1953.

However, it has been in doubt before: in January 2019, the group warned the bonus might not be paid that year.

Two months later, it cut the bonus to the lowest since the 1950s after a plunge in profits.

John Lewis warned that this time around, full-year profits might not be enough for it to pay out any bonus.

The partnership fell to a loss in the first half of 2019, as it warned of “difficult” trading conditions and “subdued consumer confidence”.

It said on Thursday that it would reverse those losses, but it warned that profits would still be “substantially down” on the previous year.

Christmas sales at John Lewis department stores were down 2% on a like-for-like basis, the partnership said.

Sales in its home and technology departments were weak, down 3.4% and 4% respectively in the seven weeks from 17 November to 4 January.

But it said Black Friday department store sales jumped 10%. At the same time, Waitrose sales rose 0.4%, which partnership chairman Sir Charlie Mayfield described as “a good sales performance” in a “weak grocery market”.

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