John Lewis boss quits as chain warns it may ditch bonus | Business
John Lewis has warned it could ditch the annual bonus to its 81,000 employees as it revealed another big fall in profits and the departure of its department store boss.
Paula Nickolds, who has been at the partnership for 25 years, is stepping down by mutual agreement next month before a previously announced management restructure. She has led the department store chain for three years, during which profits have dived.
She said she was leaving after “some reflection on the responsibilities of her proposed new role” under the new chairman, Dame Sharon White, who starts in February. Nickolds’ departure comes as Rob Collins, the boss of Waitrose, exits this month.
The retail group, which owns Waitrose supermarkets as well as its namesake department store chain, said it would consider next month whether to axe the partnership bonus payment to staff for the first time in 67 years after sales fell by 1.8% over the key Christmas period.
While Waitrose’s performance held up, rising 0.4% at established stores, sales at established John Lewis department stores slid by 2%.
The John Lewis chairman, Sir Charlie Mayfield, said he expected Waitrose profits to be broadly in line with last year but warned that department store profits would be “substantially down”.
The company said sales during the Black Friday discount period were up 10% on the equivalent period a year before but it then recorded “subdued demand” in the following weeks.
On Thursday, Marks & Spencer’s shares fell almost 5% to 208p, as it reported a fall in group sales over the Christmas period. Sales slid by 0.7% including a 0.6% drop in total UK sales and 2.3% overseas.
The retailer said it would meet annual profit expectations as it recorded its first rise in sales at established stores in three years. The turnaround was led by M&S’s food business where sales rose 1.4% at established stores in the 13 weeks to December 28. Underlying sales of clothing and homewares fell by 1.7%.
Steve Rowe, the chief executive, said M&S had faced a “challenging trading environment” but also admitted sales had been affected by “disappointing one-off issues” including problems with its menswear and gifting ranges. He said online clothing and homeware sales rose just 1.5%, a lower pace than expected.
Rowe said sales were also hit by “unprecedented discounting by competitors” in December.
Richard Lim, the chief executive of the analysis firm Retail Economics, said: “In a tough market, these figures signal a much-improved performance from the retailer and could signal the green shoots of recovery.”
He added: “While clothing and home lagged overall growth, it still improved on previous performances. The major disappointment came in the online business that barely showed any meaningful signs of growth. Integrating a seamless digital proposition remains the key challenge for the retailer.”
The stronger trading in food at M&S was announced as Tesco, the UK’s biggest supermarket chain, revealed a surprise rise in sales at its UK stores over Christmas. Sales at established stores rose 0.1% in the six weeks to 4 January. However, sales fell 0.4% at established stores in the three months to 23 November – which compares to a 0.7% fall at Sainsbury’s and 1.7% decline by Morrisons for similar periods.
The lacklustre figures were released as the British Retail Consortium trade body said last year was the worst on record for British retail, with sales falling for the first time in 24 years as a dire performance on the high street dragged down the industry.
Total sales slipped by 0.1% in 2019, according to the British Retail Consortium (BRC) and advisory firm KPMG, the lowest since they began monitoring the sector in 1995.