John Lewis cuts staff bonuses to lowest in 63 years despite soaring profits

Group warns it faces trading pressures over the year ahead as the fall in sterling increases its import costs

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John Lewis has cut its employee bonus to the lowest level in more than 60 years despite announcing surging profits.

The partnership, which is owned by its employees, reduced the bonus to 6 per cent of salaries making it the lowest since 1954. It is the fourth year in a row that the payment has been cut.

Pre-tax profits rose 21.2 per cent to £370.4m as overall sales rose 3.2 per cent but the group said it cut staff bonuses because of an “increasingly uncertain” market.

“This allows us to maintain our level of investment in the face of what we expect to be an increasingly uncertain market this year, while absorbing the costs associated with adapting the partnership for the future,” said Sir Charlie Mayfield, chairman of the group.

The group warned that trading pressures would continue for the year ahead as the fall in sterling increases its import costs. There would be a lag between this and John Lewis being able to pass on costs to customers, the company said in a statement.

The department store also said the continued move to online shopping would present a challenge.

In February, John Lewis announced that it expected to cut almost 400 jobs across its restaurants and home fittings services as a result of structural changes sweeping through the UK retail industry.

In a statement, the company said that 387 jobs would likely be cut as a result of a reshuffle. It said that around 773 staff had entered redundancy consultation and been given the opportunity to apply for 386 new roles.

Under the plans, the group said that employees would be able to “work more flexibly and ultimately open up opportunities for more skilled roles with more potential for career progression”.