John Lewis axes staff bonus for first time in almost 70 years after £635million loss
JOHN Lewis and Waitrose staff won’t be getting an annual bonus for the first time in 67 years following the coronavirus crisis.
It comes after the group said it plunged by 10% to a £635million pre-tax loss for the six months to July 25.
The only other time the bonus programme was scrapped was in 1948 following the aftermath of World War Two and it didn't resume again until 1953.
John Lewis and Waitrose had issued a warning in January that it may have to axe the annual pay-out after sales slumped, even before the coronavirus crisis hit.
The group, known as the John Lewis Partnership, now doesn't expect to start giving employees a bonus again until its profits exceed £150million.
Some 80,000 people are employed by the retail group in the UK.
Which John Lewis stores will never reopen?
JOHN Lewis has announced the following shops won't reopen:
- Birmingham - department store
- Croydon - at home shop
- Heathrow - travel hub
- Newbury - at home shop
- St Pancras - travel hub
- Swindon - at home shop
- Tamworth - at home shop
- Watford - department store
The staff bonus began in 1920 and was originally paid out in the form of stocks and shares in the company.
In 1970, it was converted to the cash bonus staff get today.
Bonuses in the 1970s and 1980s were as high as 24% and as recently as 2013 it was 17%.
In January last year, the group warned that the bonus may be axed despite sales being up over the Christmas period.
In the end, it slashed the bonus to 3 per cent of staff's annual salary - the lowest level since 1953 - when annual profits fell 45.4 per cent.
The Partnership said store closures during lockdown and customers buying less profitable items, such as toilet paper or laptops, had hit trade.
John Lewis was forced to shut all 50 of its stores for the first time in 155 years due to the government lockdown, while Waitrose shops stayed open.
But the department store chain has seen transactions "starting to build" since reopening sites, although sales are still around 30% lower than the same period last year, but still ahead of expectations.
Meanwhile, Waitrose saw like-for-like sales increase by almost 10% during the same period as shoppers continued to go to supermarkets.
Across the group, sales increased by 1.1% to £5.56billion for the half-year.
The announcement comes after the retail giant revealed plans to shut eight John Lewis stores, in a move that will put 1,300 jobs at risk.
On top of this, documents show it could also convert 40% of its Oxford Street store into offices.
It's also shutting four of its Waitrose supermarket stores, with the loss of 124 jobs.
Dame Sharon White, chairwoman of the retail group, told partners on Thursday that the announcement "will come as a blow".
She 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."
Most read in Uncategorized
Airlines, retailers, banks and restaurants have cut thousands of jobs, leaving Brits worried about their future working prospects.
READ MORE SUN STORIES
By contrast, supermarkets have seen a boom in profits, with Co-op, Tesco, Asda and Morrisons all creating temporary or permanent jobs during the pandemic.
In more retail news, high street retailer Next has agreed to buy struggling lingerie brand Victoria’s Secret.