John Lewis profits triple but staff bonuses scrapped again

The John Lewis Partnership has announced a significant leap in profits, with pre-tax earnings before exceptional items tripling to £126 million for the year ending 25 January 2025. This marks a dramatic rise from the previous year’s figure of £42 million. However, the long-standing employee-owned retailer has, for the third consecutive year, decided against paying staff bonuses.

The group, which includes John Lewis department stores and the Waitrose supermarket chain, attributed the decision to prioritising investment in employee pay and business restructuring over bonuses, despite an otherwise positive financial performance. Jason Tarry, the partnership’s chairman, stated, “I am determined to pay a bonus as soon as we possibly can, but that will depend on where we are at the time and the conditions we are facing.”

Under Tarry’s leadership, the group has seen overall sales rise by 3%, amounting to £12.8 billion, even amid challenging retail conditions exacerbated by inflation and increased competition from discounters like Aldi and Lidl. Waitrose experienced a notable 4.4% growth in sales, reaching £8 billion, while John Lewis maintained steady sales of £4.8 billion. The retailer also made significant cost savings of £255 million, primarily through supply chain efficiencies and expense reductions. A further £233 million in savings is targeted by next year.

Despite these financial gains, the decision not to pay bonuses has deeply affected morale among the group’s 69,000 partners. Historically, John Lewis staff bonuses have been a cornerstone of the partnership’s ethos, sometimes reaching up to 24% of salaries in prosperous years. In contrast, the group last disbursed a bonus in 2022, equivalent to just 3% of pay. Long-serving employees have expressed concerns over the gradual erosion of staff perks, referring to it as the “salami slicing of benefits.”

On the shop floor, some staff have speculated that the employee-ownership philosophy, once proudly centred in the retailer’s branding, is being increasingly sidelined. However, Tarry remains focused on the group’s multi-year overhaul. The partnership plans to invest £600 million this year in store refurbishments, new store openings, and improvements to its supply chain and technology. This includes the modernisation of beauty halls at its Solihull, Bluewater, and Liverpool department stores, alongside upgrades to its logistics infrastructure and efficiency systems.

The chairman has set ambitious goals for the partnership’s future, aiming for a pre-tax profit of £400 million by the 2027-28 financial year. Although challenges remain, the retailer appears to be gaining momentum through its current transformation plan, which prioritises operational efficiency and rejuvenating its brand appeal to customers.

As part of these changes, John Lewis has reduced its workforce by 4,000 people over the last year while reiterating that redundancies are viewed as a last resort. Tarry described the progress as “encouraging” but emphasised that considerable catch-up investment is still needed to position the group for sustained recovery in a fiercely competitive market.