* Partner bonus cut to 6 pct, lowest since 1954
* Operating profit incl. exceptionals lower
* To retain more profit to weather uncertain markets
(Adds executive comments)
By Paul Sandle
LONDON, March 9 Britain's John Lewis
cut its staff bonus to 6 pct, the lowest percentage payout since
1954, saying on Thursday that it needed to preserve cash to
brace for difficult times.
The employee-owned retailer, which has 48 John Lewis
department stores and 352 Waitrose food shops, said it expected
inflationary cost pressures and competition to intensify this
year and needed to defend itself against any downturn in
It cut the staff bonus from last year's 10 percent as it
reported an 11 percent fall in operating profit including
exceptional items at Waitrose and a 7.5 percent fall at John
Lewis in the year to Jan. 28.
As customers increasingly choose to shop online the firm
said it continues to invest heavily in this area.
Chairman Charlie Mayfield said John Lewis had grown its
market share over the last year, culminating in an "encouraging
market-beating performance over Christmas".
It is the fifth consecutive year the bonus rate has been cut
and is the lowest since 1954 when the rate was 4 percent.
The 86,700 staff will be paid the equivalent of around three
"We do not take the decision to reduce the bonus lightly,"
"This allows us to maintain our level of investment in the
face of what we expect to be an increasingly uncertain market
this year," he added.
John Lewis cautioned in January that the bonus was likely to
be "significantly lower", also pointing to import cost pressures
from a weaker pound since last June's Brexit vote.
Profit before the partnership bonus, tax and exceptional
items increased 21.2 percent to 370.4 million pounds.
However, a large part of the increase was due to lower
pension accounting charges. Excluding the charges, the growth
was 1.9 percent.
In the five weeks since the reporting period ended,
like-for-like sales were down 1.4 percent at both the department
stores and Waitrose.
Consumers have reined in their spending as inflation rises,
hitting retail sales.
Mayfield said, however, that the late timing of Easter - one
of the most important drivers of sales of food, flowers,
homewares and gifts - had skewed the numbers.
He said the true picture of trading would not be known until
the end of April.
Rob Collins, managing director of Waitrose, said the fall in
the value of the pound had clearly had an impact on input prices
for food, but Waitrose would track the market very closely to
He said inflation was currently flat at Waitrose, while
wider industry data indicated that inflation in the market was
1.4 percent in the 12 weeks to Feb. 26.
Paula Nickolds, the new managing director of the department
stores, said the non-food market remained deflationary, but cost
prices would move higher.
"There will be price movement during the course of the year
but being 'never knowingly undersold' we will be the last one to
move," she said, referring to the chain's long-standing price
All of Britain's supermarkets are having to deal with higher
import costs as the pound has fallen about 11.5 percent against
the euro and 19 percent against the U.S. dollar since June's
Shares in Morrisons, Britain's fourth biggest
supermarket chain, fell on Thursday as its caution over rising
costs overshadowed a first rise in annual profit in five years,
delivered by a new management team.
($1 = 0.8233 pounds)
(Reporting by James Davey and Alistair Smout; Editing by Elaine