January 12, 2017 / 8:21 AM / 2 years ago

John Lewis to cut staff bonus for online investment

LONDON (Reuters) - John Lewis, Britain biggest department store group, said it needed to invest heavily in its online business this year after 40 percent of total sales came from the internet over Christmas, showing the speed of change ripping through the retail industry.

Shoppers pass a branch of John Lewis in London, Britain, September 15, 2016. REUTERS/Toby Melville

Britons have embraced online shopping in recent years, with consumers able to buy online and pick up goods in stores or at outlets such as petrol stations, railway stations or post offices.

The planned investment and the impact of a weaker pound since Britain voted to leave the European Union in June would put pressure on profit.

As a result of those influences, the cherished bonus paid annually to staff was likely to be “significantly lower” this year, said Charlie Mayfield, chairman of the employee-owned John Lewis Partnership.

Some 91,500 John Lewis employees, known as partners, last year received a bonus of 10 percent, equivalent to more than five weeks’ pay. The size of the bonus is announced along with full-year results in March.

“Although we expect to report profits up on last year, trading profit is under pressure,” said Mayfield, chairman of a group which also runs the up-market Waitrose supermarket chain.

“This reflects the greater changes taking place across the retail sector. We expect those to quicken, especially in the next 12 months.”

Trading updates from retailers released this week showed those firms with the best online operations performed strongly.

Online-only fashion retailer ASOS (ASOS.L) said on Thursday it would also accelerate the pace of its infrastructure investment as it expects sales to rise by nearly a third this year following bumper demand over the Christmas period.

John Lewis has been among those leading the way in online sales in recent years but it said on Thursday that it now needed to rebuild to prepare the business for even faster change.

It did not say how much it would spend on the programme.

The group’s department store business posted underlying sales up 2.7 over the six weeks to December 31, with online sales up 11.8 percent and shop sales up 0.8 percent. Waitrose like-for-like sales rose 2.8 percent.

Reporting by Kate Holton and Paul Sandle; editing by Estelle Shirbon/Keith Weir

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