Waitrose to close 5 shops as John Lewis profits hit zero
The business – which includes the John Lewis department stores and Waitrose supermarkets – warned profits were expected to slump to zero by the middle of its financial year. Last year profits plunged 77 per cent to £104million.
It will also close four Waitrose convenience stores and one supermarket as it fights to get the business back on track. More than 200 staff will be affected by the closures. John Lewis’s troubles come as 10,000 shops are predicted to close on the High Street this year.
Marks & Spencer, House of Fraser, Carpetright, Mothercare and New Look are closing hundreds of stores between them. Earlier this year Toys R Us and Maplin went bust – leaving thousands jobless.
Sir Charlie Mayfield, chairman of John Lewis, said: ‘It is very important that we feel the jeopardy of what is happening right now. This isn’t a blip, it is a major shift and it has a while to run.’
John Lewis has become a High Street mainstay since it opened as a small drapers on Oxford Street in 1864. The department store bought Waitrose, now a popular middle-class supermarket, in 1937.
The group has a unique partnership structure which distributes profits to all employees – described as ‘partners’ – through bonuses.
When Waitrose closes its supermarket in Camden, north London, this year the site will be taken over by budget grocer Aldi.
Rob Collins, Waitrose’s managing director, blamed the rise of German discounters Aldi and Lidl for ramping up competition on traditional supermarkets. He said: ‘The backdrop of the discounters with their very limited range and pared-back operating models is not going to relieve the pressure on price especially given their level of investment in the UK.’
Aldi is investing more than £500million in opening 70 stores this year as it pushes toward its 1,000-shop target by 2022. By contrast, Waitrose has 353 shops and John Lewis has 50.
The Co-op will take over the four convenience stores closed by Waitrose – two in Manchester and one each in London and Birmingham.
More stores are expected to close and others downsize but Sir Charlie said closures would not get anywhere close to the 100 being shut by M&S. Nick Bubb, an independent retail expert, said: ‘Waitrose have to work hard to justify the high prices they charge, so improving shop-floor staff quality is an obvious way to go.’
The group wants to invest up to £500million a year over the next three years in improving its IT infrastructure and refitting stores.
It says the savings will come from closures, improving product ranges and reviewing the company pension scheme.
Sir Charlie refused to rule out redundancies as he confirmed it would cut costs at head office.
The group hopes to start growing profits again by 2019. A spokesman said it would focus on ‘greater differentiation’ in response to the crisis facing the retail sector.
City – Page 81
‘This isn’t a blip, it has a while to run’
JOHN Lewis has fallen victim to the High Street slowdown with a major slump in profits and five Waitrose stores now set to close.