14 March 2024 , 11:52
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John Lewis, the retail giant, has hinted at additional job cuts in the coming year as part of a revamp, despite making a profit.
The new boss, Nish Kankiwala, confirmed that a "few hundred" jobs were axed last year to save £88 million. A lot of these job losses were due to employees leaving and not being replaced.
Mr Kankiwala said the company aims to make similar cost cuts this financial year, which might lead to more jobs being cut. He said: "We're looking at all the opportunities as we improve our ways of working and if there is eventually a reduction in roles, then we'll use (staff) attrition in the same way as we have done in the past. If there are unfortunately, regrettably, redundancies then we'll talk to our partners first."
The company has decided not to give their 76,000 workers an annual bonus for the second year running. This announcement came as the John Lewis Partnership, which includes both the department store and the Waitrose supermarket, shared its pre-tax profits of £56 million for the year up to January 27.
This result is a significant improvement from their £234 million loss the previous year. It marks only the third time since 1953 that it has not handed out a bonus. Despite a decision not to pay bonuses, John Lewis Partnership (JLP) will increase overall pay for employees by a record £116 million this year.
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This move will result in pay rises for the majority of staff, with around 45,000 employees receiving a 10% salary increase from April. JLP's turnaround specialist CEO, Mr Kankiwala, explained that the group is prioritizing "investing for the long-run" rather than paying bonuses.
He acknowledged that while the group does not recognize the reported figure of a 10% workforce reduction over the next five years, there is a likelihood of fewer roles in the future. "As we improve the business and simplify, there will be potentially fewer roles," he said.
JLP plans to increase investment in 2024/25 by 70% to £542 million, focusing on modernizing technology, refreshing its shops, and simplifying the group. The group anticipates continued improvement in profit this year as it implements its new strategy.
This strategy includes opening new Waitrose shops, refurbishing 80 supermarkets, adding around 80 new brands to its department store chain, and enhancing its online offering. The company stated that it is too early to specify the number of new Waitrose shops that will open.
The company said: "Given the significant changes in the economy since we announced our strategy in 2020, we have refreshed our plan. We're simplifying our business and improving productivity to generate stronger performance, from which we will invest to modernise and energise our unique customer offer."
Sharon White, chairwoman of the John Lewis Partnership, has said they will put a lot of effort into putting money back into their shops this year.
She said: "We have made significant progress in the last year to return the business to profitability and delivered results that allow us to increase investment in our retail businesses; we expect profits to grow further this year. This shows our plan is working, while we know there's much more to do."
The report revealed that Waitrose had a tough year. Even though things cost more, they sold 1.5% less stuff than before. Waitrose's total sales went up by 5% because prices were 6.6% higher. The John Lewis stores didn't sell as much, with sales down by 4% to £4.8 billion. But they still made a bit more money, with profits up by 2% to £689 million, partly because they spent less on other things.