Employees of British retailer John Lewis should not look forward to receiving bonuses anytime soon.
The company announced it would have to slash bonuses for its 90,000 works as it succumbs to inflationary pressures and increased competition.
Though the holiday season was successful for many U.K. retailers, Bloomberg reported that the year ahead is looking difficult for many.
The employee-owned John Lewis partnership said that the rising inflation caused by Brexit as well as the increase in online competition has given way to more pressure on earnings. The owner of the department stores explained that it plans to make “significant” cuts to its annual staff bonuses as a result, Bloomberg confirmed.
“We expect both inflationary cost pressures and competition to intensify in the market as a whole,” the company said in a statement. “The rate of retail market sales growth may slow and the rate of profit growth that is achievable will be affected by margin pressure.”
John Lewis Chairman Charlie Mayfield noted that last year’s Brexit vote is a particular concern for the year ahead.
“The drop in sterling is a dog that hasn’t yet really barked,” Mayfield said on Thursday (Jan. 12). “Lots of retailers have hedged their currency positions and they will gradually unwind over the next year. How much of that inflationary pressure is absorbed by retailers and how much is passed on is the million-dollar question. It’s one of the most significant factors hanging over the year ahead.”