Economy

John Lewis expect trading to be "volatile" in 2018/19

John Lewis expect trading to be

The John Lewis Partnership is set to axe more jobs this year after the department store chain was forced to slash its annual bonus following a 77 per cent drop in profits.

Workers will get a 5 per cent bonus, down from 6 per cent a year ago - and the lowest since 1954 when it was 4 per cent.

Pre-tax profit for the year to 27 January fell to £103.9m while the employee-owned partnership's bonus scheme fell to 5% of salary - down from 6% for 2017/18 and 10% the year before that.

Gross sales for the full-year period were 2 percent higher at 11.6 billion pounds, the retailer said, adding that the outlook for 2018/19 remained hard.

The group said it expects trading this year to be "volatile" with continuing economic uncertainty and "no let-up in competitive intensity", adding that it anticipates further pressure on profits.

Sir Charlie Mayfield, the company's chairman, said 2017 had been a "challenging year".

Before one-off items, pretax profits fell almost 22% to £289.2m, largely as a result of lower profit margins at the Waitrose supermarket chain driven by the fall in the value of the pound, which has increased costs and a "commitment to competitive pricing".

He pointed to weakness in sterling putting pressure on cost prices, margins and leading to higher exceptional costs as it sped up changes to the business.

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For example, John Lewis launched its first experiential store in Oxford at the end of a year ago, and said it would roll out more of these this spring.

The company's John Lewis store chain recorded gross sales of GBP4.84 billion in the period, up 2.2%, and Waitrose supermarkets recorded 1.8% growth in sales to GBP6.75 billion.

"Consumer demand was subdued and we made significant changes to operations across the partnership which affected many partners".

Following a profit warning in January, Sir Mayfield said the business chose to reduce the proportion of profits paid as Partnership Bonus past year in a bid to absorb the impact of tougher trading conditions.

As a result, the retail group is anticipating further pressure on profits.

"We did both and I am pleased to say that despite lower profits, strong cash flow has enabled us to reduce our total net debts".

Sales were significantly impacted, particularly in John Lewis, by the heavy snow last week.


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