LONDON, March 16 (Reuters) – Britain’s John Lewis Partnership warned it would have to cut staff numbers and scrap any bonus this year after its customers cut back on spending, prompting its annual loss to balloon.
The employee-owned company, which runs John Lewis department stores and grocer Waitrose, also flagged an uncertain outlook as customers struggle with higher prices, prompting some to switch to cheaper outlets.
It is the second time the annual bonus has been axed since 2020.
Sharon White, who chairs the partnership, said on a call with reporters that the cost-cutting measures were aimed at boosting efficiency and productivity. She did not specify how many workers, known as partners, would be let go.
The business reported a loss of 234 million pounds ($283 million) in the 12 months to Jan. 28 compared to a loss of 27 million a year earlier, which it said was largely due to property write downs.
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The loss before exceptional items and tax was 78 million pounds, compared to a profit of 181 million pounds in the same period a year earlier.
The impact of inflation added 179 million pounds to its costs, finance director Bérangère Michel told reporters.
British households have been battling double-digit inflation since September and the government’s official budget forecaster said on Wednesday that the country remained on track for a record fall in living standards over the two years to March 2024.
Total sales fell 2% to 12.3 billion pounds, led by a 3% drop in Waitrose sales, which has lost market share to cheaper rivals Aldi and Lidl.
John Lewis sales rose 0.2% to 4.9 billion pounds, helped by stronger fashion and beauty offerings with items including work and holiday wear performing well.
The 159-year-old retail group has been struggling in recent years amid tough competition and the costs of developing its online offering.
White – in the middle of a five-year recovery plan – on Wednesday appointed Nish Kankiwala as the company’s first ever chief executive to help turn around its fortunes.
Looking ahead, White said the group was confident it could return to a profit in the coming year as inflation cools.
“As far as the plan is concerned, we’re on track,” she said.
($1 = 0.8262 pounds)
Reporting by Suban Abdulla; editing by Kate Holton
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