The John Lewis Partnership is to pay 85,500 employees across John Lewis and Waitrose a bonus worth 5% of their salary, totalling £74 million.
The bonuses have been awarded after the organisation announced its profit before tax, bonuses and exceptional payments of £289.2 million in the year ending 27 January 2018. This was announced as part of John Lewis Partnership’s unaudited results report, prior to the publication of its Annual report and account for 2017-2018, which will be published in April 2018.
As an employee-owned business, all 85,500 employees are partners in the organisation.
This year’s partnership bonus is lower than the 2016-2017 award, which saw staff receive a bonus worth 6% of salary, totalling £89.4 million. For the 2015-2016 award, employees received a bonus of 10% of salary, which amounted to £145 million in total. John Lewis Partnership awarded a bonus of 11% of salary in 2015, and 15% in 2014.
The organisation’s total accounting pension deficit is £731.3 million at 27 January 2018, compared to just over £1 billion at 28 January 2017.
The estimated actuarial pension deficit for John Lewis Partnership’s defined benefit (DB) pension scheme is £211 million at January 2018. For 2017, there has been deficit reduction contributions of £89.8 million, and cash contributions to the scheme totalled £204.2 million. This is 18.1% less than cash contributions made to the DB scheme in 2016.
The ongoing contribution rate for the DB scheme will be 10.4% of members’ gross taxable pay, down from 16.4%. This forms part of the plan to eliminate a deficit of £479 million over a 10-year period. This target was agreed after a triennial actuarial valuation of the DB scheme at 31 March 2016.
Sir Charlie Mayfield, chairman of John Lewis Partnership, said: “As we anticipated, 2017 was a challenging year. Consumer demand was subdued and we made significant changes to operations across the Partnership which affected many [employees]. However, their hard work throughout the year was key to delivering gross sales of £11.60 billion, up 2.0%, with like-for-like increases in both Waitrose and John Lewis. However, profit before partnership bonus, tax and exceptional items was down 21.9% mainly as a result of intensifying margin pressure in Waitrose.
“We said in January 2017 that we were preparing for tougher trading conditions with weakness in sterling feeding through into cost prices, putting pressure on margin, and much higher exceptional costs as a result of an acceleration of planned changes. This was why we chose to reduce the proportion of profits paid as partnership bonus last year so as to absorb these impacts while continuing to invest in the future and in strengthening our balance sheet. We did both and I am pleased to say that despite lower profits, strong cash flow has enabled us to reduce our total net debts.
“Partnership bonus has been awarded at 5%. We also remain committed to increasing pay rates for non-management [employees], and in October we increased pay outside the annual pay review cycle for 17,000 [employees]. As at January 2018, the average hourly rate of pay for a non-management [employee] was £8.91.”