John Lewis and Waitrose staff face bonus cut

Ribbon Cutting

Staff at John Lewis and Waitrose are facing a cut in their annual bonus as the retail group gets to grip with the black hole in its gold-plated pension scheme.

The 85,500 staff, known as partners because they co-own the company, are expected to receive a bonus worth about seven weeks' pay when the group reports its annual figures on Thursday.

All permanent employees or "partners", from its chairman Sir Charlie Mayfield to shop assistants and shelf-stackers, receive the same percentage payout which is likely to be in the region of 14%-15% compared with 17% in last year.

Although both chains had a successful year, the John Lewis Partnership has to plug the £840m deficit in its pension scheme. To get back on track the retailer has agreed to make annual payments of £44m for the next decade in addition to a one-off payment of £85m handed over last month.

In January the partnership said it was discussing a plan to drop the final salary pension scheme – one of the last such schemes left in the UK – with its staff. The proposals include the introduction of hybrid scheme tied to both a workers' final salary and other changes, including making new staff wait longer to join. There will be a staff vote on the proposals later this year.

Retail analyst Nick Bubb predicts the group will make profits before exceptionals of £370m for the year to the end of January. That compares with profits of £343m last year, which were restated to reflect changes to the way pensions are accounted for. "Barring a miracle on the payout ratio, that is likely to mean that it will be impossible to maintain last year's 17% bonus," said Bubb. "The partners can't have it both ways – a huge bonus and a generous pension."

John Lewis' department stores chain took market share over a hard fought Christmas period that culminated in a profit warning from rival chain Debenhams. In January managing director Andy Street said its "bricks and clicks" strategy continued had underpinned its success over the key period as shoppers use its stores and website interchangably. Over the year, he said, its stores had enjoyed the strongest like-of-like sales growth since the recession with 16 of its 40 shops ringing up record years.

Sister chain Waitrose also held its own in a tough grocery market, emerging alongside discounters Aldi and Lidl, as the year's success stories. The most recent market share data from Kantar showed Waitrose growing at 5.6% in the 12 weeks to 2 February 2014. That was well ahead of the big four and more than double the total market growth rate of 2.4% for the period.

While larger rivals such as Tesco and Morrisons are putting the brakes on physical store expansion, Waitrose is stepping up expansion. It opened 13 supermarkets, including five of its little Waitrose convenience stores, in 2013 and plans to open another 40 branches this year.

Powered by article was written by Zoe Wood, for The Guardian on Friday 28th February 2014 20.12 Europe/London © Guardian News and Media Limited 2010


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