Charlie Mayfield, John Lewis's chairman, was quick to point out that these extra pay-outs to staff bore no relationship to the much-criticised handouts in the banking sector:  "Our bonus is a real bonus, which reflects the actual performance of the business in the year it is awarded.  It moves up and down depending on the performance of the business.  Other businesses reward in advance of value created.  We don't do that.  And all staff - from the boardroom to the post room - receive the same percentage payout." 

So once again the principles of its founder John Spedan Lewis shine brightly.  Setting up the Partnership eighty years ago, he created a governance system, set out in its Constitution, that would be both commercial, allowing the group to move quickly to stay ahead in a competitive industry, and democratic, giving every Partner a voice in the business they co-own.  His combination of commercial acumen and corporate conscience, so ahead of its time, has indeed stood the test of time too, unlike those for instance in the previously-lauded financial sector where risk-taking, short-term thinking and self-interest have caused such long-term damage.  That is not John Lewis's way.

Rollercoaster

Mayfield described the year as a rollercoaster.  Department store turnover was flat, and as that included an extra week's trading like-for-like sales were down by 3%.  Its commitment to Never Knowingly Undersold reaped dividends with "higher volumes and increased market share, especially in TVs".

The recession has hit expansion plans.  ‘Ten stores in ten years' was the aim; four of those are already open but other than this year's opening in Cardiff and a store at the Olympic site in Stratford, projects are being delayed as developers around the country mothball schemes, mindful of dramatically reducing asset values and retailers' abilities to pay high rents and service charges.

Mayfield expects trading conditions to continue to be ‘very tough, with ongoing pressures on consumer spend and confidence'.  He anticipates that price competition will be as intense as last year.

The changing timing of the Easter break always makes weekly year-on-year comparisons meaningless at this time of year, but the cumulative figures for the first nine weeks of its new financial year (to April 4) illustrate the continuing trading difficulties.  In total, John Lewis sales are down by nearly 7%, despite benefiting from two new stores (Liverpool and Leicester) not yet open for a full year.  Only Cambridge and John Lewis Direct are showing modest year-on-year increases.  Most others are recording double-digit declines, with Cribbs Causeway Bristol the worst at nearly 17% down.

In these nine weeks sales of ‘electricals and home technology' fell by nearly 8% with the last three weeks showing a decline of double that figure.

Delay

DSGi's chief executive John Browett has endured a difficult first year or so, but his spirits will doubtless have been lifted by the reaction to a couple of announcements in early March - one his own updating shareholders on good results from his Renewal and Transformation Plan, the other from Best Buy whose plans to launch into the UK market made public a year ago had caused some in the market to question DSGi's ongoing viability.

Best Buy's much anticipated arrival in the UK has been delayed until Spring 2010, with the company claiming the delay is worthwhile as it is finding "incredible value in waiting", understandably so given the pressure under which the property sector is now operating. It would not reveal its product pricing policy or any target figures, other than to suggest with the level of investment planned it hopes ‘to take a significant share'. A high share of the spending in targeted households is the aim, by tracking every customer's transaction history and tailoring products to their lifestyles.

That delay will certainly help DSGi get its act together before any onslaught begins.

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