Partnership reveals £234m losses, scraps staff bonus and considers selling minority stake
Changes are afoot at John Lewis as the department store chain is considering changing its unique staff-ownership model, it has appointed its first ceo, and scrapped the annual bonus amid losses of £234million.
According to The Sunday Times, the much-loved retailer, which has a large greeting card and stationery department in every John Lewis store as well as a section in Waitrose supermarkets, company chairman Dame Sharon White is thought to be exploring the possibility of changing the retailer’s mutual structure in order to sell a minority stake to raise between up to £2billion of new investment.
John Lewis Partnership, which owns both John Lewis and Waitrose, was put into a trust in 1950 by the founder’s son John Spedan Lewis, making it 100% owned by the staff – or partners as they’re known.
To sell any shares, the John Lewis constitution would have to be changed, which must be voted on by the partnership council, made of around 60 staff members, with more than a two-thirds majority required for approval.
The BBC said discussions are at “very, very early stages”, with the company only considering selling a minority stake to maintain majority employee ownership.
John Lewis has worked with outside companies in the past, Ocado launched grocery deliveries for Waitrose and at the end of last year it set up a £500m multi-decade joint venture with global investment company Abrdn, which will create around 1,000 new homes for rent as part of plans to diversify the retailer’s income stream.
At the start of last week, JLP announced the appointment of retail veteran Nish Kankiwala, who has been at the business for two years as a non-executive director, as its first chief executive. He will report to the chairman, with a reshuffle of the leadership team so Naomi Simcock – the John Lewis retail director who was promoted to replace out-going executive director Pippa Wicks on an interim basis – and six other executive directors will report to Nish.
Then on Thursday, 16 March, JLP reported its losses for the year to 28 January, 2023, were £234m, £78m having stripped out exceptionals and tax, down from a profit of £181m – before partnership bonus, tax and exceptional items – last year, “principally due to economic backdrop and inflationary pressures” according to the statement.
It said the impact of inflation was felt across the business, adding £179m to the company’s costs in the year, during which it spent £32m to support partners with a cost-of-living payment and free food over winter.
In a letter Dame Sharon told staff they had been “exceptional” in another very tough year, explaining: “Shoppers felt the pain of inflation. Sales were £12.25bn, a 2% dip on the year: a combination of strong sales at John Lewis and a decline of 3% at Waitrose, reflecting that we had more customers – 20million of them, 800,000 more than last year – but they bought less. The big online growth of the pandemic years was partly reversed. Shoppers shifted some of their grocery spending to the discounters.
“It is also the case that we had some set-backs. Product supply challenges and a major fire in our Brinklow warehouse hit availability in Waitrose last summer. This was recovered through autumn and availability is now strong.
“I am sorry that the loss means we won’t be able to share a bonus this year or do as much as we would like on pay. We’ll continue to help with the cost of living in other ways – the financial assistance fund will stay at £800,000 (a doubling) and there is support for travel, childcare and living costs.”
The group also warned of future job losses, with Dame Sharon adding: “As we need to become more efficient and productive, that will have an impact on our number of partners. That’s a massive regret to me personally. It would be difficult enough in any business.”
Released before the news of the possible sale of a stake in the business broke, Dame Sharon ended the letter: “We’re not just employees; together we own the partnership. That’s a huge responsibility as well as privilege – in the good times and when it’s tough. I feel it acutely. By seizing the opportunities to transform, we will secure the partnership’s future for another 100 years.”
Top: Much-loved retailer John Lewis blames inflation for its £234m losses