John Lewis cuts its staff bonus to lowest level since the Fifties

John Lewis has slashed its year-end bonus for thousands of staff at its department stores and Waitrose supermarkets to what is believed to be its lowest level since the Fifties.

The partnership said its 86,700 staff will get just six per cent of their annual salary paid on top of their normal pay — the equivalent to an extra three weeks’ wages.

It is the fourth consecutive cut to the bonus since 2013, when it was 17 per cent of salary, and comes as the firm warned of “increasingly uncertain market” following the Brexit vote.

The bonus “pot” is down from £145 million last year to £89.4 million and compares with a peak of £210.8 million in 2013.

Sir Charlie Mayfield, chairman of John Lewis Partnership, acknowledged that some staff would be disappointed by this year’s reward, which he admitted was the “lowest for some time”.

However, he highlighted the fact that the company had raised base pay well ahead of that required by the National Living Wage and said staff understood the rationale over the bonus.

“While there will be some disappointment, there is realism and understanding,” he said.

“What we get is to accelerate plans and secure the partnership’s long-term future and that matters most, not just to a few of us, but it matters most to everybody.”

In January, the group issued a warning that the staff bonus would be “significantly lower” than last year in the face of a challenging market outlook, partly linked to the collapse in the value of the pound since the referendum in June.

John Lewis Partnership, which is owned by the employees of the two retail chains, reported pre-tax profits before exceptional items of £370.4 million for the 52 weeks to the end of January 28, a 21.2 per cent increase on last year.

However, Sir Charlie said that the figures were flattered by lower pension accounting charges and that after stripping out that, profits were up by only 1.9 per cent.

He added that said some John Lewis suppliers, such as Apple, had already raised prices of their products since the referendum and that the partnership was negotiating with other suppliers to keep prices stable. “Our teams work very hard to defend pricing to find any ways not to pass [increases] on to customers,” he said.

Sales at stores open for more than a year rose 2.7 per cent at John Lewis, but were down 0.2 per cent at Waitrose thanks to falling prices.

Supermarkets have been in a price war with discounters such as Aldi and Lidl and also face shifting consumer habits. Sales in the last five weeks of the financial year were down at both chains.

Sir Charlie said that the group, which has already announced hundreds of job cuts at both Waitrose and John Lewis, was anticipating “significant changes” in the retail sector and was determined to take the necessary steps to ensure future success.

“We are acting from a position of strength,” he said.

Last year, John Lewis promoted Paula Nickolds, who joined the company as a graduate trainee, to be the first female managing director in the department store group’s 152-year history.