John Lewis axes staff bonus and plans to cut jobs
John Lewis has axed its staff bonus for a second time and signalled job cuts are in the pipeline, after what it described as a "very tough year".
The department store firm, which also owns Waitrose supermarkets, reported a £234m pre-tax loss.
Company chair Dame Sharon White said the stores had attracted more customers, but they had spent less.
She said the losses meant bonuses could not be issued this year for the second time since it began the scheme in 1953.
Dame Sharon suggested the firm may have to reduce staff numbers, or "partners" as they are known at the company.
"As we need to become more efficient and productive, that will have an impact on our number of partners," she said.
When questioned about specific plans around job losses Dame Sharon said: "There are no numbers."
But the company said it faced a "more challenging environment" and was tripling its target to make savings from £300m to £900m by January 2026.
The company said savings would be made through the sale of assets, such as its Berkshire golf club, and by improving productivity.
Meanwhile, the strategy to move into the residential property market was "working really well" Dame Sharon said.
John Lewis said the strategy was part of its long-term plan for 40% of profits to come from outside of retail by 2030.
Inflation hurricane
But Dame Sharon said the inflation of the last year had hit the company "like a hurricane" and that customers had "felt the pain".
Despite Waitrose reporting 800,000 more shoppers in the year to 28 January, customers spent less. It said the size of the average basket fell by 15% and people were buying cheaper items.
Consequently, full-year sales at Waitrose fell by 3% to £7.31bn.
"The big online growth of the pandemic years was partly reversed," said Dame Sharon, adding: "Shoppers shifted some of their grocery spending to the discounters."
Retail analyst Catherine Shuttleworth said shoppers were "cherrypicking what they buy at Waitrose".
The decline in Waitrose sales volumes is significant Ms Shuttleworth said: "Volumes are the life-blood of supermarket businesses - the more you sell, the better the prices you can offer to shoppers.
"Food inflation continues to be a massive issue, so it's unlikely that food shopper behaviour will change anytime soon."
Across its John Lewis department stores, revenue edged up 0.2% to £4.94bn. For the partnership as a whole, sales fell to £12.2bn from £12.4bn in the previous year.
It is the third year of pre-tax losses for John Lewis. Last year, it reported a £27m loss, far below this most recent result.
Dame Sharon said even as inflation starts to fall the partnership is still seeing costs rise. The rate of price rises - or inflation - has been slowing but at 10.1% remains close to a 40-year high.
During the Budget announcement on Wednesday, the Office for Budget Responsibility said it expected inflation to fall to 2.9% by the end of the year.