John Lewis chair: ‘We want to help staff every month rather than once a year’
What: John Lewis Partnership triples profit to GBP 126m while prioritising monthly staff support over annual bonuses.
Why it is important: The decision to focus on regular staff support rather than annual bonuses, coupled with strong profit growth, reflects a fundamental evolution in retail employment practices while maintaining the Partnership's core values in an increasingly competitive market.
John Lewis Partnership has demonstrated remarkable financial recovery with profit before tax and exceptional items tripling to GBP 126m in the year to January 2025. The company's strategic focus on productivity has driven operating profit margin up by 0.9 percentage points to 2%, while overall revenue grew by 3% to GBP 12.8bn. Despite this strong performance, the Partnership has chosen to forgo staff bonuses for the third consecutive year, instead investing GBP 114m in base pay improvements. This decision reflects a significant shift in employee compensation strategy, prioritising consistent monthly support over annual rewards. The retail division has shown varied performance across categories, with menswear achieving record sales of GBP 150m and strong growth in own-brand offerings. Notable success was seen in partner brands including Reiss, Jojo Maman Bébé, and Ralph Lauren Kids, while the reinstated Never Knowingly Undersold pledge has helped maintain competitive positioning. The Partnership remains confident in achieving its GBP 400m profit target by 2028, despite acknowledging ongoing macro-economic challenges affecting customer spending power.
IADS Notes: John Lewis's latest financial results represent the culmination of a comprehensive transformation strategy initiated in March 2024 when the company returned to profitability. The significant investment of GBP 800 million announced in October 2024 has begun showing returns, particularly in operational efficiency and brand development. The revival of the "Never Knowingly Undersold" pledge in September 2024, enhanced by AI technology, has proven particularly successful, driving a 55% increase in daily website visits and contributing to improved sales performance. The company's strategic shift from annual bonuses to monthly support aligns with its March 2025 commitment of GBP 114 million to employee pay increases, reflecting a broader trend in retail workforce management. This transformation has been underpinned by significant operational improvements, including the modernisation of distribution centres and the expansion of beauty counters by 24%, demonstrating John Lewis's successful return to core retail excellence while embracing technological innovation.
