John Lewis cuts staff bonus as profit falls
LONDON (Reuters) - Britain's John Lewis Partnership cut its annual staff bonus on Thursday as it reported an 11 percent fall in profit, hurt by higher pension charges, lower property profits and a tough trading environment.
The 151-year-old partnership, whose worker co-ownership model has been lauded by Prime Minister David Cameron, was cautious about prospects for its John Lewis department stores and upmarket Waitrose supermarket chain in 2016.
"Conditions in the market will remain difficult, especially in grocery," said Chairman Charlie Mayfield.
"However, given our continued investment in both our operations and our customer offer, I expect sales in both Waitrose and John Lewis to continue to perform comparatively well against the market."
An industry survey published on Tuesday showed British shoppers were a bit more reluctant to part with their cash in February than in January, adding to signs of a slowdown in the economy at the start of 2016.
Some 91,500 John Lewis employees, known as partners, will receive a bonus of 10 percent, equivalent to more than five weeks' pay, down from 11 percent last year.
The Partnership made a profit before partnership bonus, tax and one-off items of 306 million pounds for the year to Jan. 30. That was within guidance of between 270 million pounds and 320 million pounds, but down 10.9 percent on the previous year.
Excluding the impact of higher pension charges and a lower contribution from property, profit was up around 7 percent. Gross sales were 11 billion pounds, up 0.7 percent, as both businesses won market share.
On a sales basis the partnership has outperformed rivals for half a decade, helped by its strong online offer, modern stores and a bias to the more prosperous southeast of England.
Operating profit before property profit at John Lewis, Britain's biggest department store chain, rose 0.7 percent, while at Waitrose, Britain's sixth-largest supermarket business, it increased 3.9 percent.
The partnership, which is alone among major British retailers in publishing weekly sales updates, said like-for-like sales at the department stores were up 3.6 percent in the first five weeks of its new financial year, and up 0.4 percent at Waitrose.
(Reporting by James Davey; Editing by David Goodman and Mark Potter)
