John Lewis Partnership warned its staff they may not receive a bonus this year but said full-time workers will receive a £500 “one-off cost of living support payment”.
While part-time staff will receive less on a pro-rata basis, the department store and Waitrose supermarket owner said it is increasing the lowest rates of pay, will supply free food at work for 14 weeks over winter and double its financial assistance fund to help with bills.
In response to the rampant rises in the cost of living, chair Sharon White said the partnership was “making an active choice” to spend £45mln on the package, having also increased its basic pay in April in line with the real living wage.
John Lewis, which is owned by its 70,000 staff, or partners as it calls them, is also increasing the entry level pay by 4%, which it said will cost £10mln in the second half.
Citing a “uniquely uncertain” economic outlook, she said a successful Christmas would be “key” for the business given the first half saw a loss before tax of £99mln, compared with a £29mln loss last year.
“We will need a substantial strengthening of performance, beyond what we usually achieve in the second half, to generate sufficient profit to share a partnership bonus with partners,” Lewis said.
The loss was largely attributed due to “the combination of cost inflation being not fully passed on to customers, impact of cost of living crisis, unwinding of Covid shopping patterns and investments to support partners, customers and suppliers”.
It said it was being “extremely considered” about how and where cost inflation is passed on to customers, having frozen the prices of certain items such as school uniforms.
Sales at John Lewis were up 3% on a like-for-like (LFL) basis to £2.1bn.
LFL sales declined 5% at Waitrose to £3.6bn as basket sizes shrank by nearly a fifth even though customer transactions were up 14% year-on-year.