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John Lewis staff braced for bonus cut

Staff at John Lewis and Waitrose expect bonuses of between 12 and 14% of salary, down from 18% last year

Staff at John Lewis and Waitrose may face their first bonus cut in three years, in a sign that even the stalwart of the British high street is not immune to the economic downturn.

Analysts said the employee-owned business is likely to offer a bonus of between 12% and 14% of salary to its 77,000 staff, compared with 18% last year.

The drop shows the downside to the rosy picture politicians like to paint of the “John Lewis” model, which gives each employee part-ownership of the company, a share of its annual profits and a say in how it is run.

Neil Saunders, managing director of retail consultancy Conlumino, said: “I think relative to the rest of the high street they’ve been doing very well. They’ve gained market share both on the John Lewis and Waitrose side of the business. Their performance has been robust compared to others. That said, like others, they’ve had to do more discounting.”

Last year, the company made a promise never to be beaten on price, in response to its customers’ growing concern over household finances. But the move hit first-half profits, which dropped by almost 20% to £90.4m.

Saunders said: “Unlike others, they’ve also done quite a lot of investment — refurbishing stores, opening new stores, taking on new staff — and that has all had an impact on profitability, which is why we expect the impact on the bonus.”

The second half is expected to be an improvement on the first, boosted by a successful Christmas, but the company is not expected to beat last year’s pre-tax profits of £366m.

Independent retail analyst Nick Bubb, who tracks the company’s weekly sales figures, expects profits of around £350m when the company posts its results on Wednesday next week.

Saunders added: “They have not been immune from the difficulties in the market but they have emerged from it in pretty good shape.”

The John Lewis Partnership is endlessly cited by politicians, seeking to replicate the model whereby stakeholders are somehow invested in the results of the organisation.

In 2010, London’s Lambeth council announced an intention to remould itself according to the “John Lewis model”. Last June, David Cameron unveiled plans to turn parts of the public sector into “John Lewis-style” mutuals. Even Nick Clegg has talked about making other firms in the private sector operate a bit more like John Lewis. © 2012 Guardian News and Media Limited or its affiliated companies. All rights reserved. | Use of this content is subject to our Terms & Conditions | More Feeds