John Lewis Partnership Chair Dame Sharon White has confirmed the firm’s ambitious “transformation” plan will be delayed by two years, affecting annual staff bonuses.
The retailer faced a big loss of £59 million for the half-year.
Though the company asserts that no official decision has been made, bonuses could be delayed for this year and possibly the next.
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The employee-owned business attributes the setback to inflation and the necessity for increased investment to achieve its transformation goals.
Dame Sharon White, appointed as chairman to modernize the company, said the “cost-of-living crunch” necessitates an extended timeline for the plan.
Critics argue that John Lewis has lagged behind in adapting to contemporary retail trends.
Initially scheduled for completion by 2025/26, the modernization plan will now extend until 2027/28.
Moreover, the company said these investments will precede staff payouts.
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This year’s decision not to pay a staff bonus marks only the second occurrence of such an event since 1953.
White emphasized a “productivity deficit” and characterized the current retail market as “the most competitive ever.”
She cautioned about the challenges ahead.
The reported £59 million loss represents an improvement from the £99 million loss recorded a year earlier.
The group aims to achieve profitability for the entire year, with a significant portion of its revenue generated during the last three months.
John Lewis Partnership maintains that its brands remain robust, boasting an influx of 600,000 new customers, reaching 21.4 million.
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Waitrose reported a 4 percent increase in sales, reaching £3.7 billion, aided by a slowdown in dining out and a new £5 lunchtime meal deal.
In contrast, John Lewis experienced a 2 percent drop in sales to £2.1 billion, with declines in “big ticket” items like computers offset by fashion and beauty sales growth.
JLP said it has been “More loafers and fewer sofas.”
White said: “While change is never easy – and there is a long road ahead – there are reasons for optimism.
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“Performance is improving. More customers are shopping with us.
“Trust in the brands and support for the Partnership model remain high.”
To address the rising issue of shoplifting affecting all retailers, the John Lewis Partnership is offering free coffee to police officers who visit its stores.
The company reported a £12 million year-on-year increase in “shrinkage,” primarily attributed to theft.
Chief executive Nish Kankiwala, who assumed the role in March, confirmed that the modernization efforts are underway.
