By Scott Wright

THE boss of the John Lewis Partnership has evoked the spirit of the retailer’s post-war recovery as she broke the news to staff yesterday that they will not be receiving a bonus next year.

Chairman Dame Sharon White cited the “uncertain” outlook for the economy in the second half amid the continuing economic crisis as employee owners of John Lewis department stores and Waitrose food halls were told the bonus would not be paid for the first time since 1953.

Dame Sharon, who conceded the news “will come as a blow”, signalled that the company would most likely make a “small loss or a small profit for the year”, “given the broader macroeconomy”.

“The partnership board has now confirmed that there will not be a bonus next year given our profit outlook,” Dame Sharon said.

“I know this will come as a blow to partners who have worked so hard this year. The decision in no way detracts from the commitment and dedication that you have shown.”

Dame Sharon added: “The partnership found itself in a similar position in 1948 when the bonus was halted following the Second World War. We came through then to be even stronger than before and we will do so again.”

The bonus will not resume until profits exceed £150m and the company’s debt ratio, which it described as total net debts as a proportion of cash flow, “falls below four times”. It forecasts the debt ratio will return to under four times in two to three years.

The bonus decision came as the company reported a £635m loss before tax for the six months ended July 25, following write-downs to the value of the John Lewis store estate of £470m.

The impairments reflected the dramatic change to trading patterns seen at John Lewis over the course of the pandemic, with online sales commanding an ever-increasing share of overall revenue. More than 60 per cent of its sales are now made online, compared with 40% before the pandemic, the retailer reported.

“As a result of this pronounced shift to digital we had to reassess how much shops contribute to whether our customers buy online with us or not,” Dame Sharon said. “Before the crisis we believed that shops contributed around £6 of every £10 spent online. We now think that figure is, on average, £3. This has the effect of reducing the book value of John Lewis ships by about £470m.”

Dame Sharon reiterated that the company is targeting £100m of head office savings, which it will seek to achieve by removing around 75 of its 225 senior managers from its payroll. It is looking to make those cuts “as early as possible this financial year and next”, Dame Sharon added. She told staff that the company’s new strategy is “taking shape” and will reveal more details next month.
The update comes a day after the group revealed plans to shut four of its Waitrose stores, with the loss of 124 jobs. 
In July, it announced the closure of eight John Lewis stores, in a move which put 1,300 jobs at risk.