For the first time since 1953, John Lewis may slash its staff bonus this year in the wake of the worst Christmas for retailers.
After tough year John Lewis saying it "will need to consider carefully…whether payment of a bonus is prudent". That's despite pick up in sales over Xmas.
— Zoe Wood (@zoewoodguardian) January 10, 2019
The group said its board would “need to consider carefully … whether payment of a bonus is prudent in the light of business and economic prospects at that time”.
Its chairman, Sir Charlie Mayfield, warned that partnership profits will be substantially lower this year despite higher sales at Christmas, due to heavy discounting by rivals and weak consumer demand.
Commenting on this, Simon Underwood, business recovery partner at accountancy firm, Menzies LLP, said: “After the company’s disappointing half-year results (published last year), this Christmas trading report (from John Lewis) will do little to reassure staff and other stakeholders.
“Despite modest growth in like-for-like sales – 1.4% – the retailer has said that it is expecting to report a fall in profits – clear evidence that depressed footfall and falling consumer confidence has led to some cut-throat discounting and promotional activity.
“At a time when many other retailers have been forced to downgrade their full-year profits, John Lewis had seemed immune to the problems facing the High Street. If monthly trading performances resume the erratic pattern seen during the last few months of 2018, things could change rapidly, and staff bonuses could be hit.
“Recent trading performances have shown that no retailer has immunity from the challenging conditions, regardless of whether they are trading online, offline or both. To stay profitable in the uncertain times ahead, they must stay focused on cash-flow management, whilst reducing costs and prioritising profitable activities.”