John Lewis cuts staff bonus as sales fail to shine

JOHN LEWIS, Britain’s biggest department store group, cut its staff bonus for the first time in three years yesterday after falling yearly profits showed the downturn is also hitting its more well-heeled customer base.

However, the group played down tougher trading in its Scottish stores than those in the south, with overall like-for-like sales at its Aberdeen, Edinburgh and Glasgow outlets 1.4 per cent lower in the year to 28 January. That compared to a 1.3 per cent same-floorspace sales rise in the wider UK.

Andy Street, managing director of the group, said: “We should not draw any long-term picture out of this.

“[Scotland] was slightly softer than England because the English performance was helped by the London stores. London was stronger than the rest of the country.”

Street said that, since the beginning of the new financial year, the Scottish sales performance was better than elsewhere in the UK.

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The employee-owned company, which also has the upmarket Waitrose supermarket business, said that its 77,000 staff, known as partners, will get a bonus of 14 per cent of salary, equal to seven weeks pay. That compares with 18 per cent in the previous 12 months.

The overall bonus pot is cut to £165.2 million from £194.5m, as operating profits at John Lewis Partnership fell £37.7m to £393.3m.

Profit before tax and bonus payments was £353.8m, down 3.8 per cent on £367.9m the year before, as the company’s earnings were hit by greater price discounting in its department stores.

Operating profits at Waitrose fell over 5 per cent to £260.6m, while like-for-like sales were up 3.6 per cent.

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The subsidiary has four shops in Scotland.

Charlie Mayfield, John Lewis Partnership’s chairman, said the “challenging” trading conditions were unlikely to abate soon as consumer demand was still “subdued” despite slight signs of the economic picture easing.

The group said the Queen’s Diamond Jubilee and the London 2012 Olympic Games may lift the consumer spending mood as the year progressed.

“I don’t think there will be fantastic growth, but I think it will be an improvement given what we have seen for the past 18 months or so,” Mayfield said.

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John Lewis said its Edinburgh department store saw “significant” sales increases of iPads, Kindles, desktops and laptops in the latest trading year. Mid-range handbag sales at the store rose 12 per cent, the group added, “as customers move away from the ‘it’ [more expensively fashionable] bag”.

Sales of the Apple iPad soared 370 per cent at the Glasgow department store, while the Aberdeen outlet saw wallpaper sales up 26 per cent and mirrors up 38 per cent.

John Lewis, the only British retailer to publish weekly sales figures, said total revenue rose 6.4 per cent to £8.73 billion.