Cost of living: Annual bonus threat as John Lewis suffers first-half loss of £99m

John Lewis Partnership has slumped to a £99 million first-half loss as it said it chose to “forgo” profit to help colleagues and customers cope with the cost-of-living crisis.

The employee-owned group, whose workers are known as “partners”, announced a £500 one-off payment to full-time staff, with a pro-rata amount for those working part-time. It also said it was increasing the entry level pay by 4 per cent for employees within the group - which will cost it £10m over the second half as part of a £45m support package.

But the measures, as well as efforts to rein in prices for customers despite “unprecedented” hikes in its own costs, are taking their toll on the retail giant’s bottom line.

The pre-tax losses for the six months to July 30 compare with a smaller deficit of £29m a year earlier.

The results showed that like-for-like sales lifted 3 per cent year-on-year in the department store business, which includes sites in Edinburgh and Glasgow, but fell 5 per cent in Waitrose stores.

The group cautioned over a “highly uncertain” end to the year - including the peak festive period - as the cost crunch impacts consumer spending. It also warned employees that it would need a “substantial strengthening” of its performance over the second half of the year to put it on track to pay out an annual staff bonus.

Dame Sharon White, chairman of John Lewis Partnership, said: “We have made a conscious choice to forgo some of our profit to provide more support to partners and more support to some of our suppliers and customers as well.

“Given what we have seen with energy bills and direct debits starting to land, we felt it was the right thing to do.”

John Lewis has two department stores in Scotland - in Edinburgh and at Glasgow's Buchanan Galleries, above. Picture: John Devlin

She added: “No-one could have predicted the scale of the cost-of-living crisis that has materialised, with energy prices and inflation rising ahead of anyone's expectations. As a business, we have faced unprecedented cost inflation across grocery and general merchandise.”

The one-off payment will benefit all of the group’s 76,000 workers, of which around 60 per cent are full-time and 40 per cent part-time.