John Lewis bonus looks doubtful after poor Christmas results

Paula Nickolds is to step down as managing director of John Lewis and Partners

John Lewis Partnership has warned that staff may not receive a bonus this year after a disappointing set of Christmas sales results, with annual profits for the year expected to fall.

The worker-owned retailer added that Paula Nickolds, managing director of department store business John Lewis and Partners, is to stand down. Gross sales for the business were £1,134m, down 2.3% on last year and down 2% on a like-for-like basis. Its online sales increased by 1.4%.

At food business Waitrose & Partners gross sales (excluding fuel) were £1,033m, down 1.3% versus last year (due to shop closures) but up 0.4% on a like-for-like basis. Online sales increased by 16.7% and in the seven days to Christmas online grocery orders were up 23.4%.

Gross sales across the whole Partnership for the festive period were down 1.8% last year, to £2,167m.

Sir Charlie Mayfield, chair of the John Lewis Partnership, said: “We saw a good sales performance in Waitrose & Partners, despite a weak grocery market, with like-for-like sales up 0.4%. In John Lewis & Partners like-for-like sales were 2.0% down on last year. Operationally – across availability, service, delivery and online – we saw a strong performance in both brands.

“In John Lewis & Partners, beauty sales were up 4.7%, comfortably ahead of the market, with overall fashion sales up 0.1%. Home sales were down 3.4% and electricals and home technology sales were down 4%. We saw significant variation in levels of demand with Black Friday sales up 10% on the equivalent period last year, followed by more subdued demand in the subsequent weeks.

Paula Nickolds stands down next month (Photo: Greg Funnell/ John Lewis)

“In Waitrose & Partners we saw encouraging progress against our milestones to accelerate growth online next year, with a 23.4% increase in orders and an increase in basket sizes in the seven days to Christmas.”

Sir Charlie said he expected profits at Waitrose to be broadly in line with last year, but at John Lewis profits will be substantially down on last year.

He added: “The partnership board will meet in February to decide whether it is prudent to pay a partnership bonus. The decision will be influenced by our level of profitability, planned investment and maintaining the strength of our balance sheet.”

The departure of Ms Nickolds, the first female managing director of the Partnership, has surprised industry observers. She had been expected to become executive director of brand next month, when the executive teams behind John Lewis and Waitrose are merging into a single team.

A spokesperson for John Lewis said: “After some reflection on the responsibilities of her proposed new role, we have decided together that the implementation of the future partnership structure in February is the right time for her to move on.”

Ms Nickolds was the first woman to become managing director of the partnership, having worked her way up after joining as a graduate trainee in 1994.

She will leave the partnership next month, when Sir Charlie is also due to step down; he will be replaced by former civil servant Sharon White.

“Paula has been a brilliant leader of this business for many years,” said Sir Charlie. “We decided together now is the time to step away.”