The John Lewis Partnership has warned that staff may miss out on their annual bonus as it expects full-year profits to be “substantially lower” this year, despite a rise in sales over Christmas.
Gross sales at the owner of John Lewis & Partners and Waitrose & Partners were up 1.4% on last year to £2.2bn for the seven weeks to 5 January.
At John Lewis & Partners, gross sales were up 2.5% to £1.16bn, and up 1% on a like-for-like basis. Fashion sales rose by 6.8%.
The retailer said it continued to make “good progress” with its own-brand and exclusive products, noting a particularly strong performance in own-brand womenswear, up 14.7%.
However, the wider partnership warned that it expected a fall in full-year profits due to slower overall sales growth and margin pressures, which meant it would have to “consider carefully” whether to pay its staff bonus.
Partnership chairman Sir Charlie Mayfield said: ”Two main factors are affecting the retail sector - oversupply of physical space and relatively weak consumer demand. Despite this, we had a positive Christmas trading period thanks to the extraordinary efforts of partners in our business, delivering differentiated products and service to customers.
“We continue to expect full year total partnership profits to be substantially lower this year, driven by slower sales growth over the year and margin pressure in John Lewis & Partners along with higher costs, mainly as a result of our continued investment in our IT capability.
”The actions taken in recent years to prepare for the current pressures in retail mean that the partnership has the financial strength and flexibility to pay a modest bonus this year, without impacting our ambitious investment programme.
”However, the board will need to consider carefully in March, following the usual process, whether payment of a bonus is prudent in the light of business and economic prospects at that time.”