JOHN Lewis Partnership has warned of further job cuts as the upmarket retailer moved back into profit in its most recent financial year.

The retail giant's new chief executive, Nish Kankiwala, confirmed a "few hundred" roles were axed last year under moves to save £88 million in costs and conceded there could be cuts of a “similar magnitude” in the year ahead.

The warning came as the employee-owned company, which owns John Lewis department stores and the Waitrose grocery chain, made a profit before tax of £56 million for the 52 weeks ended January 27, a £290m improvement on the year before.

But despite the retailer's return to the black there was again no bonus for its 76,000 employee owners.

It was the third time in four years a pay-out was not made, though the company said it had invested a record £116m in pay increases for colleagues. This means around 45,000 employees will see their salaries increase by 10% from April.

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“After careful consideration, we believe that investing in partner pay and improving our business must continue to take priority over paying a bonus,” the firm said.

“Consequently, there will be no partnership bonus paid this year.”

The John Lewis Partnership reported a 1% rise in total partnership sales to £12.4 billion, with the company saying one million more customers shopped in its stores compared with the previous year, lifting the tally to 22.6 million.

Waitrose saw sales rise by 5% to £7.7bn as a record number of people shopped in its stores, helping its operating profit rise by £170m to £1.064bn.

But amid challenging conditions on the high street, the John Lewis department store division saw sales fall by 4% to £4.8bn, though operating profit improved by £13m to £689m.

The John Lewis group flagged its expectation of achieving further growth in profits in its current financial year, during which it will hike investment in the business by more than 70% to £542m. Much of that will be focused on modernising technology, refreshing shops, and simplifying work processes.

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The company pledged to open more Waitrose stores in areas where the brand is “underserved” and plans to refurbish 80 outlets in the next three years, while for John Lewis department stores investment will be made to improve its online experience and technology to boost customer service.

Under chairman Sharon White, who announced plans to step down in October as her five-year term moves into its final stages, John Lewis has trimmed its portfolio of department stores and exited its expensive London headquarters.

One research analyst raised the prospect that more John Lewis department stores could be shuttered as consumers continue to be challenged by inflation and high interest rates, which are continuing to put pressure on the housing market.

"The department store industry continues to struggle amid a cost of living crisis,” said Yanmei Tang, an analyst at Third Bridge. “Our experts say John Lewis, with its significant reliance on home sales for revenue, may face even greater challenges ahead. The persistently sluggish housing market is unlikely to provide any relief.

“John Lewis also faces stiff competition from online giants like Amazon, as well as newcomers such as M&S and Next. They need to maintain its differentiation in assortment and keep real exclusivity of some of the brands.”

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“Expectations are for more store closures as they adjust their footprint, with increased investment in key locations. Despite this, our experts say John Lewis's strong online presence means that while store closures may occur, sales are likely to shift online rather than being lost entirely.”

Reports in January suggested the company was poised to make as many as 11,000 redundancies over the next five years. The company confirmed at the time that there would be cuts as part of its plan to return to profit, without specifying a number.

Asked to comment on redundancies yesterday, Nish Kankiwala said: “We're looking at all the opportunities as we improve our ways of working and if there is eventually a reduction in roles, then we'll use (staff) attrition in the same way as we have done in the past.

“If there are unfortunately, regrettably, redundancies then we'll talk to our partners first.”

Ms White said: “We have made significant progress in the last year to return the business to profitability and delivered results that allow us to increase investment in our retail businesses; we expect profits to grow further this year.

“This shows our plan is working, while we know there’s much more to do. Our improved performance has been supported by our customers’ love for both brands, with more people choosing to shop with us than ever before, and our partners’ commitment to delivering excellent customer service.

“This year we will unashamedly focus on investing back into our retail businesses for our customers, including opening new Waitrose shops and continuing to modernise our brand offering in John Lewis, while prioritising pay for our partners.”