John Lewis Partnership has announced a £55m loss before tax in its half-year results as a result of the Covid-19 pandemic and confirmed that staff bonuses will not be paid this financial year. Total group sales were up 1% to £5.56bn in the same period, as online sales helped offset the impact of shop closures. The partnership said this still was a “creditable performance” given the circumstances of the pandemic and the lockdown it prompted, and was ahead of expectations set out in its April trading update.
John Lewis chair, Sharon White, said: “I said to partners in April that I could not see the circumstances in which we would be able to pay a bonus next March. The Partnership Board has now confirmed that there will not be a bonus next year given our profit outlook. 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. Outside of exceptional circumstances, we would now expect to begin paying a bonus again once our profits exceed £150m and our debt ratio falls below 4 times. Once our profits rise above £300m and a debt ratio below 3 times, we would expect to pay a bonus of at least 10%.”
“The outlook for the second half is clearly uncertain given the broader macro-economy, ” she adds. “Christmas trade is also particularly important to profits in John Lewis and I would ask partners to do everything we can to serve customers brilliantly both in John Lewis and Waitrose. In April, we set out a worst-case scenario for the full year of a sales fall of 5% in Waitrose and 35% in John Lewis. That remains our worst-case view. We now believe the most likely outcome will be a small loss or a small profit for the year. As I have mentioned previously, we are targeting £100m head office savings, and we are aiming to make these savings as early as possible this financial year and next.”
