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Employee-owned UK retailer John Lewis has said it will not pay a staff bonus despite a rise in annual sales and profits and will prioritise investing in its turnaround plans instead.
The group, which includes the John Lewis department store chain and supermarket business Waitrose, has reported a 73 per cent increase in pre-tax profit to £97mn for the year to January 25.
Sales rose 3 per cent overall to £12.8bn, thanks to a better performance by Waitrose. Sales for this part of the business were up 4.4 per cent to £8bn, while for John Lewis they were flat at £4.8bn.
The retailer said it did not believe “it would be right” to pay a bonus for last year as it continues to reinvest to revive its fortunes after a challenging period, and after it increased pay by a total of £114mn earlier this year. The last time it paid a bonus was for the year to January 2022.
New chair Jason Tarry, who spent many years at Tesco and succeeded Dame Sharon White in September, said: “These are solid results, which show that our customers are responding well to our investments.”
Waitrose has made efforts to lower prices, launch new ranges and refurbish stores. At John Lewis, the group has added new fashion brands and invested in its beauty counters and modernising its systems. It plans to inject another £600mn in its “transformation” this year.
Profit before tax and exceptional items, its preferred metric, tripled from £42mn to £126mn.
It said it expected profits to increase further this year, although it acknowledged that the economic environment was “challenging for our customers and our business”.
Over the past five years, like other retailers, it has had to deal with the pandemic, high inflation, changing shopping habits and fierce competition. At the same time, it has been trying to return to profitability and improve sales amid criticism that White lacked the retail background to turn the business round.
The group said on Thursday that it had repaid a £300mn bond from cash reserves, resulting in the lowest borrowing since 2002. Its employee-owned structure means it has limited ability to raise money externally.
