John Lewis has once again denied its staff their cherished bonuses, and the retail giant has also issued a warning of possible job losses as it seeks to revive its fortunes. The employee-owned group, which includes department stores and Waitrose supermarkets, announced that there would be no salary boost, despite returning to profit after three years of losses. The decision means that John Lewis Partnership has not paid a bonus for three of the four years that chair Dame Sharon White has been in charge, a period that includes the challenging pandemic. Prior to her appointment in 2020, the company consistently rewarded its staff with a cash boost equivalent to one or two months’ salary for 68 consecutive years.
No Bonuses, but Efforts to Raise Minimum Wages
While the absence of bonuses may come as a disappointment to John Lewis staff, the company has taken steps to raise minimum wages for its employees. It has spent £116 million to increase minimum staff wages by 10% to £11.55 per hour. However, the wage hike still puts the company behind competitors Tesco, Asda, and Aldi, which pay a minimum of £12 per hour.
Dame Sharon highlighted that the company provides staff perks such as subsidized holidays, emphasizing the group’s commitment to worthwhile and satisfying employment within a successful business. Despite the absence of bonuses, John Lewis Partnership reported pre-tax profits of £56 million, a significant improvement compared to the £234 million loss the previous year. The company closed 16 department stores during the pandemic and has cut a total of 4,000 jobs through store closures and head office reductions.
Potential Job Losses and a Return to Retail Focus
Looking ahead, reports suggest that John Lewis may cut an additional 11,000 jobs over the next five years as it aims to improve the efficiency of its stores and introduce more robotics into its warehouses. Dame Sharon stated that while there is no specific target for job losses, some roles will naturally become less necessary in the coming years. Furthermore, the company’s new CEO, Nish Kankiwala, announced that their strategy would now focus unashamedly on retail, marking a shift from Dame Sharon’s previous goal of generating 40% of income from non-retail sources.
The decision to abandon the 2030 target for non-retail profits has been seen as a move to strip away distractions and refocus on the core retail business. Some critics believe that Dame Sharon’s ambitions to expand into garden centers, housing, and financial services have taken the company off course. However, she affirmed the group’s continued commitment to housing and financial services as part of a broader “family of businesses.” Despite this, Dame Sharon could not provide a timeline for the completion of the first John Lewis home development.
Moonpig’s AI Cards Drive Sales
In other business news, Moonpig has experienced strong sales during occasions such as Valentine’s Day and Mother’s Day due to the use of artificial intelligence (AI) in generating personalized messages for cards. The AI-driven “smart text” feature helps customers create heartfelt and customized messages when they struggle to find the right words. While AI-generated messages often need some editing, the technology has proven successful in driving sales for Moonpig.
Shell Shifts Focus to Gas Business
Shell, the multinational energy company, has revised one of its climate pledges to prioritize the growth of its gas business. CEO Wael Sawan highlighted the risk of energy shortages if the world does not invest in drilling for oil and gas. Shell now aims to reduce the “net carbon intensity” of the energy it sells by 15-20% by 2030, a slightly lower target than the previous 20%. The company believes this strategy will offset the carbon produced by its oil and gas operations against the less polluting aspects of the business. Mr. Sawan’s decision to prioritize shareholder returns has drawn criticism from environmental campaigners. Additionally, Shell revealed that Mr. Sawan’s total pay amounted to £7.94 million, £2 million less than his predecessor’s remuneration in 2022.
Store Closures and New Openings
In 2023, a total of 14,081 stores closed, averaging 39 closures per day. These closures included 583 bank branches, 722 pubs, and 787 pharmacies. However, this was partially offset by 9,138 new store openings, predominantly in retail parks and shopping centers. The most common new stores were takeaways, coffee shops, and discount supermarkets.
Unilever CEO’s Incentive Package
Unilever CEO Hein Schumacher will potentially earn nearly £15 million if he successfully boosts the company’s share price. His incentives include a minimum reward of £7.3 million for achieving sales growth, shareholder returns, and sustainability targets. If he also manages to increase the company’s share price by 50% over three years, his reward will rise to an impressive £14.8 million. Notably, Unilever’s share price has declined by 9% over the past five years.
AG Barr Job Cuts
AG Barr, the company behind Irn Bru and Rubicon juice, has announced job cuts amounting to almost 200 roles. The company plans to restructure its product sales to retailers, resulting in the closure of its direct sales operations and the shutdown of its Leeds office.
Deliveroo Narrows Losses
Food delivery company Deliveroo has seen a substantial reduction in losses as it signs up more retailers. Losses diminished from £231 million in 2022 to £10.9 million. The company expects to achieve positive cash flow this year. Deliveroo aims to ensure that customers pay the same prices for meals as they would in supermarkets and restaurants, addressing the issue of inflation and more expensive restaurant meals. Grocery orders now account for 13% of its sales.
It’s clear that the retail landscape is continually changing, with major companies like John Lewis adapting to the market and exploring new avenues to drive growth. Stay updated with the latest business news on F5 Magazine.