The John Lewis Partnership is back in the black after three years of losses, but it is struggling to keep up with the resurgence of rival Marks and Spencer.
The group behind Waitrose and the John Lewis department stores unveiled profits of £56million for the 12 months to the end of January, having made a loss of £234million a year earlier.
It was the first profit since the pandemic struck but came alongside a somewhat underwhelming rise in revenues of 2 per cent to £10.8billion.
And the profits were still not enough for bosses to bring back its annual bonus for staff, as revealed by The Mail on Sunday last weekend.
John Lewis is owned by its 70,000-strong workforce, who are also known as ‘partners’. They typically get an annual bonus on top of their base salary but were left disappointed once again this year.
Departing: The John Lewis Partnership, which is headed by chairman Dame Sharon White (pictured), unveiled profits of £56m for the 12 months to the end of January
The company, headed by chairman Dame Sharon White, who is set to leave next year, said it ‘would not be right’ to award a payout while the company cuts costs. It is the second year in a row that workers have been denied a bonus and the third time since 1953.
The woes at John Lewis put it at odds with M&S, which stormed back into the FTSE 100 last year as its recovery picked up pace.
In its most recent figures, M&S posted its 11th successive quarter of growth, including a 7 per cent sales jump year-on-year over Christmas.
Food sales led the way with 10 per cent growth, while clothing and homeware climbed 5 per cent.
Analysts put this down to M&S dropping its dowdy clothing and attracting younger shoppers. Actress Sienna Miller was the face of its autumn collection and Ted Lasso star Hannah Waddingham featured in its Christmas advert.
In January, M&S chief executive Stuart Machin said the business was entering 2024 with ‘a spring in our step’.
By contrast, John Lewis has struggled to revive its shops. Yesterday, it said department store sales fell 4 per cent to £4.8billion last year, largely weighed down by a weak performance for home and tech products as shoppers cut back.
But Waitrose was a bright spot, with sales up 5 per cent to £7.7billion, despite lifting its prices by 7 per cent in the year on average.
A million more customers shopped at the group last year, taking the total to 22.6million.
But the improvements were not enough to restart the annual bonus, which may prove controversial for workers concerned about job cuts.
And rather than handing them a bonus, bosses said there was a responsibility to ‘ensure the partnership is sustainable into the long term’, which has meant investing in stores and driving up base pay.
Pay could be increased by a record £116million this year, it said.
It comes as the business ploughs ahead with a turn-around, which could mean 11,000 jobs will be lost over the next five years in a bid to save £900million, reports suggest. The group has already made cuts of £88million over the past financial year.
Yet at half-year results in September, John Lewis warned it would take a further two years to complete the cuts, shifting the end date from 2025-26 to 2027-28.
White said it would focus ‘unashamedly’ on its retail by opening more Waitrose shops and refurbishing existing ones. John Lewis has also scrapped targets for its non-retail departments, including for financial services and housebuilding divisions.
This marks a major climbdown from previous goals, which included building and renting out 10,000 homes as part of plans to generate 40 per cent of profits from outside retail by 2030.
But change is already afoot. In October, White said that she would be stepping down as chairman in February 2025, making her the shortest-serving boss in the partnership’s 94-year history.
The former Ofcom chief joined at the start of 2020 and has been criticised for her lack of retail experience. Rumours have swirled about who will be named as her replacement.
Katie Bickerstaffe, the first woman to lead M&S when she was made co-chief executive two years ago, has been tipped as a candidate. She leaves M&S in July and has helped revive the High Street giant.
Garry White, of wealth manager Charles Stanley, said M&S’s resurgence meant the sustainability of John Lewis was ‘not guaranteed’.
Read More: World News | Entertainment News | Celeb News
Mail Online
