John Lewis signals more job cuts as staff bonus ditched despite return to profit
The retail giant said it would not pay its 76,000 workers an annual bonus for the second year running, but would hike pay by 10% for 45,000 staff.
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Your support makes all the difference.The John Lewis Partnership has cautioned over possible job cuts in the year ahead as part of an overhaul as the group revealed it would not hand out a staff bonus once again despite returning to profit.
The retail giant’s new chief executive, Nish Kankiwala, confirmed a “few hundred” roles were axed last year under moves to save £88 million in costs, although many of the job cuts were through staff turnover and not replacing workers when they left.
He told the PA news agency the group was looking to cut costs by a “similar magnitude” in the current financial year, which could lead to more roles being stripped out.
Given the significant changes in the economy since we announced our strategy in 2020, we have refreshed our plan
He said: “We’re looking at all the opportunities as we improve our ways of working and if there is eventually a reduction in roles, then we’ll use (staff) attrition in the same way as we have done in the past.
“If there are unfortunately, regrettably, redundancies then we’ll talk to our partners first.”
Sharon White, the chairwoman of the partnership, told reporters that there is “no target” for job cuts but indicated that some roles will be impacted by its turnaround strategy.
“Part of our refresh plan is that we are becoming simpler and more flexible,” she said.
“There will be less need for some roles in some areas over the coming years as a result, but there is no specific target.”
The employee-owned group – which runs the department store chain and the Waitrose supermarket arm – reported pre-tax profits of £56 million for the year to January 27 against losses of £234 million in the previous year.
It said that after “careful consideration” it would not pay its 76,000 workers an annual bonus for the second year running, marking only the third time since 1953 that it has not made the payout.
But the firm said it would increase overall pay for employees by a record £116 million this year.
This would see the majority of its staff get pay rises, with around 45,000 employees seeing salaries increase by 10% from April.
On the the decision not to pay a bonus, Mr Kankiwala said the group was focusing on “investing for the long-run”.
It was recently reported that the John Lewis Partnership (JLP) was mulling a 10% cut in its workforce, accounting for around 11,000 staff jobs, over the next five years as part of aims to save £900 million by 2027/28.
Mr Kankiwala – a turnaround specialist who was last year appointed as JLP’s first chief executive – said that while the group did not recognise the 10% figure, it was likely there would be fewer roles within five years.
“As we improve the business and simplify, there will be potentially fewer roles,” he told PA.
We’re simplifying our business and improving productivity to generate stronger performance, from which we will invest to modernise and energise our unique customer offer
JLP said it would look to increase investment in 2024/25 by 70% to £542 million, which would focus on modernising technology, refreshing its shops and simplifying the group.
The group said it expected to make a “continued improvement” in profit this year as it overhauled its strategy.
This would include opening new Waitrose shops and refurbishing 80 supermarkets, while adding around 80 new brands to the department store chain and improving its online offering.
The firm said it was too early to confirm how many new Waitrose shops would open.
It said: “Given the significant changes in the economy since we announced our strategy in 2020, we have refreshed our plan.
“We’re simplifying our business and improving productivity to generate stronger performance, from which we will invest to modernise and energise our unique customer offer.”
We have made significant progress in the last year to return the business to profitability and delivered results that allow us to increase investment in our retail businesses; we expect profits to grow further this year
Sharon White, chairwoman of the John Lewis Partnership, said the group would “unashamedly focus on investing back into our retail businesses” over the year ahead.
She said: “We have made significant progress in the last year to return the business to profitability and delivered results that allow us to increase investment in our retail businesses; we expect profits to grow further this year.
“This shows our plan is working, while we know there’s much more to do.”
The results showed it was a difficult year for Waitrose, as sales by volume – with the boost from higher prices stripped out – fell by 1.5% in the past year.
Total Waitrose sales rose 5% as prices rose 6.6%.
The department store chain saw sales fall 4% to £4.8 billion, but trading operating profit lifted 2% to £689 million thanks in part to cost savings.