The John Lewis Partnership will axe jobs after a 77pc fall in profits that also saw it slash staff bonuses to the lowest level in more than 60 years.
The group, which includes Waitrose and John Lewis department stores, became the latest big name to suffer from a brutal slowdown on the High Street.
Stores have reported a big shift in shopping habits from consumers with millions going online, and supermarkets are being hammered by competition from discounters Aldi and Lidl.
Online clobbering: The John Lewis Partnership, which includes Waitrose, became the latest big name to suffer from a brutal slowdown on the High Street
John Lewis is undergoing a radical overhaul since Paula Nickolds took over as managing director in January last year. Its parent group saw profits plunge 77pc last year to £103.9m as it was dealt a £111.3m blow associated mostly with restructuring and redundancy costs.
As a result of this, its bonus to staff, who are partners in the firm, was chopped to 5pc of wages last year – around £1,000 each – the lowest since 1954 and the fifth year in a row it has been reduced.
Around 1,440 workers were made redundant during 2017, and yesterday chairman Sir Charlie Mayfield admitted many more would go.
Growth at John Lewis and Waitrose all but stalled, and sales from visitors to the department store fell 3pc. However year on year operating profits for John Lewis department stores went up by 4.5 per cent before exceptional payments and partner bonuses.
Many analysts had expected both businesses, which cater for the higher end of the market, to dodge some of the recent High Street woes.
Fashion chain New Look said almost 1,000 jobs were under threat as it considered closing around one in ten of its stores. Last week Toys R Us and Maplin crashed into administration, putting 5,500 jobs at risk.
Mayfield said: ‘There’s about 5pc fewer partners in the business as of this time versus last year. We’re expecting the number of partners will continue to decline.’ And he even left open the possibility that bonuses could be axed.
The only times John Lewis has not paid a bonus were during the First and Second World Wars and in the early 1950s.
‘What it reflects is that the most important thing for our business is its long-term future,’ Mayfield added. ‘If that meant we have to have zero bonus then we would absolutely have it.’ He warned profits could fall further.
‘We expect trading to continue to be volatile and we’re not expecting any let-up in the competitive intensity in the market. As a result, we’re expecting continuing pressures on profits.’
Declining store sales dragged on John Lewis’s like-for-like performance which increased just 0.4pc last year. Online sales were up 15pc while purchases in stores dropped by 3pc. John Lewis said it has no plans for new stores in this financial year but is weeks away from opening a 230,000 sq ft store in west London.
Nickolds said: ‘The world of retail is changing and so it’s likely that retailers will need fewer shops. We’re advantaged here in that we only have 50, and they’re trading successfully. Our investment in existing shops will be the feature of the next chapter.’
At Waitrose, sales also edged up just slightly – with a 0.9pc increase last year. The supermarket said margins were hit as it decided not to pass on all increases in food costs. For example, the cost of its Essential range butter soared by 200pc, but its price was put up only 36pc.