John Lewis has announced that it will be significantly cutting staff bonuses this year in order to prepare for the plummeting value of the pound.
Chairman for John Lewis and Waitrose Charlie Mayfield states: “This is going to be a challenging year; retailers are going to suffer as a result of rising importing costs. We are also suffering major setbacks as consumers opt for online shopping.”
He also mentioned that the decrease in the value of the pound hadn’t really started to have an effect on retailers, “but this year, we are going to feel the effects of this.”
Mayfield claims that the major reason for such drastic transformations in 2017 is as a result of the devalued pound.
This is going to be the fourth year in a row that staff bonuses have been reduced. However, when profits decline this is not unusual. In 2016, their 91,500 employees received a bonus that was 10% of their salary. This has been the lowest bonus in 13 years.
The bonus payout began in 1920, during the Second World War and the 1950 recession it was suspended. In the 1980’s it peaked at 24% of total salary and the highest payout in recent years was in 2011 at 18%.
Despite an increase in sales over the Christmas period, the decision to cut bonuses is still going ahead.
The Waitrose store also experienced high sales this Christmas with a 2.8% increase.
“Even though we are expecting an increase on sales profits, it’s trading profits that we are concerned about.”
Sales profits in general are being affected because of the shift towards online sales and associated delivery and returns costs.
Finally, Mayfield stated “balance is the key to our success. It only makes sense to retain more profit to provide us with more capital to invest in the future of the business.
Photo credit: Paul Wilkinson