John Lewis will cut staff bonus as profit comes under pressure

 
Helen Cahill
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John Lewis opened a new store in Leeds last year (Source: John Lewis)

The John Lewis Partnership has warned profit is "under pressure" due to falling shop prices, the growing dominance of online shopping, and cost pressures from the devaluation of sterling.

The company, which shares its profits with staff through an annual bonus, said the difficulties the business is facing will mean the employee bonus will be "significantly lower" than last year.

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In the John Lewis Partnership's Christmas trading update, chairman Sir Charlie Mayfield said full-year profit will be higher than last year, but this will be due to lower pension charges following a change to the company's pension scheme.

The John Lewis Partnership's trading profit - which excludes tax, pension costs and the staff bonus - was "under pressure as a result of wider changes taking place in retail". The company will reports its full year results in March.

Retail analyst Nick Bubb said:

We did warn that increased discounting and price matching will have cost John Lewis quite a bit of gross margin and that the skewing of sales growth to online will have been expensive in terms of fulfilment and distribution costs, so John Lewis profits could be underwhelming.

Over the six weeks to the end of December, the Partnership's total sales were up 4.9 per cent year-on-year to £1.9bn. John Lewis' like-for-like sales were up 2.7 per cent and Waitrose's like-for-like sales increased 2.8 per cent. Both arms of the Partnership grew market share.

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