Staff bonus up in air as John Lewis tempers expectations
Many of John Lewis’ more than 70,000 employees will be hoping for some good news next week, as the retail giant will announce whether it will be reinstating its sorely missed staff bonus after years of freezes.
The bonus handed out to staff had long been a central part of John Lewis’ brand, as symbolic as its “never knowingly undersold” motto – which, too, had been scrapped, before being re-adopted in 2024.
The retailer first scrapped the bonus in 2020, when the Covid-19 lockdowns hit the company’s bottom line, which was the first time the commitment had been suspended since 1953.
John Lewis returned the bonus in 2022 but has not paid it out since then, meaning staff have not received the usual-yearly boost in four of the last five years.
The company will confirm whether it is scrapping the bonus again this year when it announces its financial results on Thursday, and conflicting signals sent by its leadership mean the retailer’s staff will not be getting their hopes up.
Jason Tarry, the former UK boss of Tesco, was met with a warm welcome when he joined John Lewis as its chief executive in 2024, with analysts expecting the new appointment to overhaul the retailer’s “social club” culture.
The leadership of former civil servant Sharon White, who Tarry replaced, had become mired by store closures, job cuts and the short-lived scrapping of the “never knowingly undersold” motto.
Tarry has brought calm to John Lewis and wants to further win staff over by reinstating the bonus with a two per cent payout, The Times has reported.
“You’ve got to get your partners onside and get them excited because people have been through a tough time in that business. The bonus has always been a mark of the John Lewis difference,” a former senior employee said.
But other signals are far less promising. Executives warned staff that next week’s financial results will reflect a “subdued” retail market in an internal memo, according to The Telegraph.
‘Things will not get easier’
In a stark departure from the upbeat messaging surrounding Tarry’s leadership elsewhere, staff who saw the memo claimed the chief executive said “things will not get easier going forward”.
John Lewis had previously said it would need to take £200m in profits before returning to the bonus but analysts expect profits to be closer to £140m.
JLP’s losses tripled in September, as loss before tax and exceptional items increased to £88m from £30m the year before.
The company’s performance warning comes in a difficult time for the retail sector, as bosses warn they are being hammered by growing employment costs and last year’s business rates reforms.
Retailers have said the Labour government’s workers’ rights reforms, if not implemented carefully, could result in soaring hiring costs which force bosses to cut hours and slash jobs.
Last month, John Lewis axed its short-lived rental housing venture, blaming economic conditions which it said had significantly worsened since the company started the project in 2020.
The company said this was a tactical move to enable a stronger focus on its retail offering, as it invests £800m in improving its in-store experience, which recently saw Topshop return to its floors.
“The strategy is progressing well and involves modernising our stores, enhancing our digital platforms and improving our supply chain to provide the best possible quality, service and value to our customers,” a spokesperson said when the move was announced.
The John Lewis Partnership was contacted for comment.