Employee-owned retailer John Lewis cut its staff bonus for the second year in a row as its pension deficit rose, and it forecast declining performance from its Waitrose grocery stores.
The bonus paid to staff was cut to 11 per cent of salary, from 15 per cent last year, the London-based company said today in a statement. Its pension deficit climbed 25 per cent from a year earlier to £1.25 billion, a fourth straight increase.
The closely-held company, which runs the John Lewis chain of department stores and the upmarket food shop Waitrose, said last month that it would replace its final salary pension with a new plan. Operating profit declined 24 per cent at Waitrose as it opened new outlets and became embroiled in a price battle against bigger retailers like Tesco.
“We expect the returns for the grocery sector to be materially lower for a period of time,” Charlie Mayfield, the John Lewis partnership’s chairman, said in the statement. “The market remains challenging.”
The partnership’s 93,800 workers receive the bonus as a percentage of their individual salaries. Pretax profit rose 4.7 per cent to £351 million, adjusting for one more selling week last year and gains from real estate sales. Excluding one-time items, earnings fell 11 per cent.
Bloomberg News, Edited by ESM
