John Lewis will not pay staff bonus despite rising profits
What: Employee-owned retailer John Lewis forgoes partner bonus to reinvest profits, as Waitrose drives 3% overall sales growth to £12.8 billion whilst department store sales remain flat.
Why it is important: This strategic pivot demonstrates how heritage retailers are prioritising long-term sustainability over short-term rewards, especially noteworthy given John Lewis's recent return to profitability and substantial investment commitments.
John Lewis Partnership has reported a significant financial improvement with a 73% increase in pre-tax profit to £97 million for the year ending January 25. The group's overall sales rose by 3% to £12.8 billion, primarily driven by Waitrose's strong performance, which saw a 4.4% increase to £8 billion. However, the John Lewis department store division maintained flat sales at £4.8 billion. Despite this positive financial trajectory, the partnership has decided against paying a staff bonus, prioritising reinvestment in its turnaround strategy. This decision follows a substantial pay increase earlier this year, totalling £114 million. Under new chair Jason Tarry's leadership, the company plans to inject an additional £600 million into its transformation programme this year. The retailer's preferred metric of profit before tax and exceptional items showed even more impressive growth, tripling from £42 million to £126 million. This strategic approach has also strengthened the company's financial position, with borrowing reaching its lowest level since 2002 following the repayment of a £300 million bond from cash reserves.
IADS Notes: John Lewis's decision not to pay staff bonuses despite improved profits reflects a strategic shift in its business approach. In March 2024, the company abandoned its diversification plans to focus on core retail operations, marking a return to profitability after years of losses. This pivot was reinforced in October 2024 with an £800 million investment in retail transformation, particularly in modernising stores and enhancing beauty departments. The strategy has shown promising results, with the February 2025 revival of the "Never Knowingly Undersold" pledge, powered by AI technology, driving significant increases in customer engagement. The company's current prioritisation of reinvesting profits into the business, rather than distributing bonuses, aligns with its March 2025 commitment of £114 million to employee pay increases, demonstrating a balanced approach between long-term business sustainability and staff welfare.
