John Lewis is back in the black, but the glory days of big bonuses seem far away

It is well over a decade since John Lewis staff last gathered in its cavernous Oxford Street store to cheer the announcement of a bumper annual bonus. Workers could be forgiven for booing instead this week if, as expected, the company announces the third missed bonus in four years.

The owner of John Lewis and Waitrose is expected to announce that it has bounced back into the black when it unveils annual results on Thursday – but workers are unlikely to see a payout. The staff-owned company, whose 34 department stores and 329 supermarkets employ 74,000 people, is struggling to compete with a revived Marks & Spencer, Boots and Sainsbury’s as well as fast-growing, newer businesses such as Dunelm, Amazon and Home Bargains.

Nick Bubb, an independent retail analyst, expects the John Lewis Partnership to report an underlying profit of about £25m, after a loss of more than £77m last year.

He predicts a 2% increase in sales to almost £10.8bn after Waitrose returned to growth, partly thanks to food price inflation. He thinks sales at Waitrose rose by about 4% in the second half, which includes Christmas, but sales at the department stores are likely to have fallen by more than 2%.

The group has just announced the biggest increase in basic pay in its history, but is also banking the effects of some tough cost-cutting measures at head office, with more than 1,500 job cuts and the closure of unprofitable stores. Up to 11,000 more job cuts are expected in the coming years, but no further details on that are anticipated this week.

Bubb says: “The markets they are in were pretty good two years ago but now they have obviously reversed.” The group still has “too many stores and too much space” and “until they really confront that issue it is going to be tough”.

Outgoing chairman Sharon White, who clocked in just before the pandemic and is set to leave early next year, will hope the return to profit marks the beginning of an upturn so she can depart on a high. Under her, the group has taken some tough and necessary decisions: closing eight department stores and several supermarkets as well as shrinking the head office team and moving out of its expensive London headquarters.

She has been criticised for focusing on projects such as building homes to rent and expanding financial services while the core retail business drifted.

Both Waitrose and the department stores have been losing market share: they failed to take full advantage of Debenhams’ demise and lost out to cheaper rivals when the cost of living crisis hit. John Lewis stores appear to have lost focus in the past year, with the Anyday cut-price brand, launched to much fanfare in 2021, less visible. There is also no sign of a renewed loyalty programme or marketing gambit that is a viable alternative to the Never Knowingly Undersold promise which was ditched in 2022.

Sharon White is quitting as chairman early next year. Photograph: Ken McKay/Shutterstock

Zoe Mills of market research firm GlobalData said: “When Anyday launched, it had big areas that were very focused, with industrial orange. In homewares it is now just a few lines mixed in. It feels like it has not been executed consistently.”

It’s not clear who could fill White’s shoes. Much-fancied replacement Katie Bickerstaffe, co-chief executive of M&S, appeared to rule herself out last week when she announced she was quitting for a “portfolio career”. Other contenders are thought to include the former Sainsbury’s boss Justin King, although he recently took a job as chairman of energy group Ovo; Mike Coupe, who succeeded King at Sainsbury’s and is on the board of fashion chain New Look; and former Co-op chair and Selfridges deputy chairman Allan Leighton.

The recent hire of well-respected former John Lewis staffer Peter Ruis to head up the department stores has been well received. Now in place for almost two months, Ruis is likely to provide the first taste of his plans for the retailer this week. It’s not clear whether he will have access to a budget that might help enliven stores.

John Lewis’s department stores have survived where rivals Debenhams and Beales have virtually disappeared from the high street, while House of Fraser has shrunk to 29 stores, half its size when it was bought out of administration in 2018.

Nonetheless, with household budgets still under pressure, even for well-heeled shoppers, the group has plenty to do before workers can celebrate a bonus again.


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