Bumper bonuses for John Lewis staff

Retail: Results soar at profit-sharing group Up-market furniture stores come to market Sales lower than expected, says CBI
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The Independent Online
The 36,000 staff at the John Lewis Partnership will receive bonuses worth 10 weeks' pay after the department store and Waitrose supermarket retailer reported record profits.

The payouts are worth 20 per cent of salary and are the highest paid by the group since 1988/89, the last year of the 1980s consumer boom.

The bumper bonuses are the result of a hugely successful 1996 at John Lewis, where profits soared by 45 per cent to pounds 217m. Sales at the 23 department stores were 13 per cent ahead while those at Waitrose were 11 per cent higher.

Stuart Hampson, chairman, who will be paid the same percentage bonus as everyone else, said he was delighted at the performance but warned against over-optimism.

"The growth in our sales and profits should not be interpreted as a proof that an Eighties-style consumer boom is upon us," he said. "Although there is clear evidence that there is more money in the pocket, it is being spent with caution and with a particular eye for value."

He said furnishings sales had been particularly strong, boosted by the recovering housing market, while Waitrose had done well in an increasingly competitive food retail sector.

Mr Hampson singled out the John Lewis ownership structure as a mainstay of its consistent performance. "Our results show the benefits of a business that shares its profits with its staff. I can sit up here on the 12th floor having good ideas but if a salesperson is snapping at a customer on the sales floor then your reputation has gone. That extra bit of care makes all the difference."

He added: "It is one of the reason I am so cross with the Chancellor about the phasing out of tax relief on profit-related pay. He is undermining something that is a route to competitiveness."

Analysts say that as well as its reassuring "Never knowingly undersold" price promise and its huge range of choice - there are 1,000 types of zip and 2,000 types of button on offer - the partnership structure has always underpinned John Lewis's smooth progress.

Every member is given an induction course on the structure of the company upon joining. All stores open half an hour later one day each week so that staff can hold "communications meetings" where problems and ideas are discussed.

Each store elects representatives to the branch council which is kept informed of all financial affairs. The council meets six times a year with 80 per cent of the 137 seats taken by staff representatives and the rest by senior management.

The result, experts say, is better customer service and greater loyalty. Almost a third of John Lewis staff have worked for the group for more than 10 years. Over 3,000 - almost 10 per cent - have put in over 20 years service.

John Lewis sales were 12 per cent higher last year at pounds 3.2bn. The results were boosted by the first full year of the Cheadle store in Cheshire. It is due to open branches in Glasgow and Bluewater in Kent in 1999.