Staff at John Lewis' Newcastle celebrate their annual bonus

Employee-owned business gives partners 11% - down from 15% in 2014 - following a 9% profits drop throughout group

Annual bonuses enjoyed by John Lewis Partnership staff have dropped for the second year running following a 9% decrease in profit before tax to £342.7m in the 53 weeks ending January 31, 2015.

The salaries of the group’s 93,800 ‘partners’ will be bumped up by 11% this year - almost six weeks’ pay, or £156.2m - compared to a 15% award in 2013/14 and 17% in 2012/13.

The perk is the result of a employee-owned business model that sees those working for the company - rather than shareholders - benefitting from strong performances.

During 2014/15, the group was hit mostly by the effects of the supermarket price war on Waitrose, the operating profits of which fell 23.4% to £237.4m, despite like-for-like sales rising 1.4% and market share growth.

John Lewis announce their annual bonus of 11% at their Newcastle store
John Lewis announce their annual bonus of 11% at their Newcastle store

The John Lewis department stores, meanwhile, achieved 10.8% increase in operating profit to £250.5m and Karen Matthew, manager of the Newcastle store, said the drop in the bonus had done little to dampen the excitement felt by partners there.

“The atmosphere has been fantastic,” she said. “I joined this branch last September and am fortunate to work with a group of fantastic partners here - there are 550 in total.

“A lot of the partners - especially in Newcastle - have been here a long time and have seen years with larger bonuses and smaller bonuses.

“It makes no difference to us; we are just appreciative of what the business is able to share with the partners as it is a reflection of the hard work they have put in throughout the year.”

She added that the partners had faith in the board when it came to making the right financial decisions.

“This is a business that is absolutely thriving and is still growing its market share,” she said.

“We are leading in omni-channel retail and in order to do that, we have to make sure we invest for the future and make the right investments.”

During the year, the Newcastle store enjoyed a particularly strong performance in its home department, where a number of new ranges and concepts were introduced.

Its fashion ranges also did well and, while its electrical and technology department experienced a more challenging second half to the year - in line with the industry as a whole - Black Friday proved a record day within the store’s 150th birthday year.

John Lewis announce their annual bonus of 11% at their Newcastle store
John Lewis announce their annual bonus of 11% at their Newcastle store

Looking forward into 2015, Mrs Matthew added that it would continue to emphasise quality and customer service across its varied sales outlets.

“We are very aware that the businesses that succeed in this multi-channel world are those that have bricks and clicks,” she said.

“It’s not just about shops or just about websites - we are at the leading edge in both arenas.”

John Lewis Partnership chairman Sir Charlie Mayfield said: “We expect the returns for the grocery sector to materially lower for a period of time.

“Waitrose’s value perception has improved significantly over the last few years and we will continue to defend that hard-won position during this period of change in the grocery sector.

“For John Lewis, the outlook is robust. Our focus remains on positioning our brand to outperform and or investment in supply chain and systems, which has been growing for some years, will exceed that in new shops and refurbishment for the first time this year.”

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