John Lewis and Waitrose axed staff bonuses for the first time in 65 years after recording a $71 million loss

Neil Hall/Reuters
  • The John Lewis Partnership, the UK retail giant that owns department store John Lewis and supermarket chain Waitrose, won’t be paying staff bonuses for the first time since 1953, it said Thursday.
  • The group recorded a £55 million ($71 million) first-half loss and expects a “small loss or a small profit” for the year.
  • Though the group’s sales rose by 1%, customers bought less profitable items such as toilet paper and laptops.

British retail giant John Lewis Partnership announced Thursday that it won't pay staff bonuses for the first time since 1953, after recording a £55 million ($71 million) first-half loss.

The group, which owns department store John Lewis and supermarket chain Waitrose, expects to pay bonuses again when annual profits reach £150 million ($193 million) and its debt ratio falls. Chairman Sharon White said the group will make a "small loss or a small profit" for the year.

She compared the group's position to the aftermath of the Second World War.
"The partnership found itself in a similar position in 1948 when the bonus was halted following the Second World War, White wrote to staff. "We came through then to be even stronger than before and we will do so again."

In the first half of 2020, the group's sales rose by 1%, but customers bought less profitable items such as toilet paper and laptops, which meant operating profit fell by 9.3%. For John Lewis, it fell by 46%.

At John Lewis, total sales were down 10% on the same period last year. Stores shutting during coronavirus lockdown cost an estimated £200 million ($258 million) in sales, the group said.

However, the department store's online sales rose by 73% during the pandemic, and now account for 60% of all sales.

Sales up at Waitrose thanks to online surge

At upmarket supermarket Waitrose, like-for-like sales were up nearly 10% on last year, driven by rising online sales. The supermarket has almost tripled its number of weekly online orders since before the pandemic, the group said. The average shop is four times bigger for home deliveries than in store, it added. Waitrose ended its contract with delivery service Ocado on September 1 — but online orders through were up 9% in the first week after it ended. The supermarket also started a trial partnership with delivery app Deliveroo in five areas.

Despite rising sales at Waitrose, the group announced that it would close three Waitrose stores and sell one to Tesco, Britain's biggest supermarket chain. It will also not reopen eight John Lewis stores after lockdown, it said.

The group will continue to cut costs by making head office savings totalling £100 million ($129 million), it said, to offset coronavirus-related costs of around £50 million ($65 million).

But the group remains optimistic about sales during the festive season. John Lewis opened its Christmas shop in late August, and it reported "markedly" higher sales of Christmas trees and baubles than last year.

Addressing the scrapping of this year's bonus, Chairman Sharon White said: "I know this will come as a blow to partners who have worked so hard this year.

"The decision in no way detracts from the commitment and dedication that you have shown."