Bonus cut for John Lewis staff

John Lewis and Waitrose staff saw their bonuses slashed today (PETER MACDIARMID / GETTY IMAGES)

John Lewis and Waitrose staff saw their bonuses slashed for the first time in three years today as the employee-owned group proved it was not immune to the tough economic climate.

John Lewis Partnership, which has more than 75,000 staff, unveiled a payout of 14% of salary from a bonus pot of £165.2 million, compared with 18% last year from a bonus pot of £194.5 million.

Each worker - from weekend check-out assistants to chairman Charlie Mayfield - receives the same percentage of salary as a bonus.

The lower bonus came as the group recorded a 4% decrease in pre-tax, pre-bonus profits to £353.8 million after efforts to bring in more customers through its price-matching campaigns hit earnings.

Mr Mayfield said: "Profound changes are taking place in the retail sector and importantly this was a year when we upped the pace of innovation and investment.

"That came at the price of some short-term profit but leaves us in a good place at the start of this year."

Mr Mayfield said partnership sales were 7.7% higher than last year in the five weeks since the end of the reporting period, January 28, and is "cautiously optimistic" that conditions will continue to improve later this year.

He said events such as the Queen's Diamond Jubilee and the London 2012 Olympic and Paralympic Games would hopefully provide a lift for consumers.

Supermarket Waitrose, which has 272 branches and saw its market share increase by 0.2% to 4.1% in the period, achieved a 7.9% increase in sales excluding VAT to £5.1 billion. The supermarket opened 29 new branches in the period.

But operating profit for the year was down 5% to £260.6 million as investments in store space and new formats held back earnings.

The department stores, of which there are 35, including six At Home outlets, saw sales increase 1% to £2.79 billion, but operating profit fell 20% to £157.9 million.

The group said the decline was driven by the £23.8 million invested in its "Never Knowingly Undersold" policy, which sees it match rivals' special offers.

Earnings were also hit by the opening of a new store in London's Stratford, the partnership said.

Looking ahead, the group will open its first smaller format department store in Exeter in October, as well as a full upgrade of the johnlewis.com website.

PA