John Lewis Partnership returned to profit in its last financial year, but confirmed it would not pay its staff a bonus for the third time in four years.
The retail group pulled in pre-tax profit of £42m before exceptional items for the year ended 27 January, up from a £78m loss the year before.
The partnership’s sales nudged up 1% on last year to £12.4bn, while total revenue rose 2% to £10.8bn.
Waitrose sales advanced 5% to £7.7bn over the year as trading operating profit grew £170m to £1.064bn at grocery chain. However, sales volumes were down 1.5% as average item prices rose 6.6% in the face of soaring inflation.
At John Lewis, sales dipped 4% to £4.8bn as “weaker sales” in home and technology hit the top line, however it saw a £13m improvement in trading operating profit to £689m.
Despite the improved profit, John Lewis Partnership said it would not pay a bonus as it prioritised investing in base pay.
It said: “As employee-owners, we have a shared responsibility to ensure the Partnership is sustainable into the long-term. We’ve consistently said that at this point in our transformation, this is best served by investing in our retail businesses and in Partners’ base pay. So after careful consideration we do not believe it would be right to award a Partnership Bonus this year”, it said.
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John Lewis said its profit growth was achieved through a combination of sales growth, gross margin rate improvement and sustainable productivity improvements.
It made £111m in productivity improvements over the year, bringing its total to £420m since it kicked off its Partnership plan in January 2021.
Looking ahead, the business said it expected to see continued improvement in key financial performance measures, including profit before tax, partnership bonus and exceptional items.
It said it was entering a year of significant investment, with £542m planned for the period, much of which would focus on modernising technology, refreshing shops and simplifying how the brand worked.
John Lewis Partnership chair Sharon White 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. Our improved performance has been supported by our customers’ love for both brands, with more people choosing to shop with us than ever before, and our Partners’ commitment to delivering excellent customer service.”
She continued: “This year we will unashamedly focus on investing back into our retail businesses for our customers, including opening new Waitrose shops and continuing to modernise our brand offering in John Lewis, while prioritising pay for our partners.”
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