Some John Lewis stores won’t reopen after virus, says new boss
THE new boss of John Lewis has warned staff that stores are set to be permanently closed and the prized bonus axed altogether as the business grapples with plummeting profitability.
Sharon White, the chairman of one of Britain’s best-loved retailers, also said that a central London headquarters where 450 people work will be shut down.
In a letter to 80,000 partners seen by the Evening Standard, she said: “The difficult reality is that we have too much store space for the way people want to shop now. As difficult as it is, we now know that it is highly unlikely that we will reopen all our John Lewis stores. Regrettably, it is likely that there will be implications for some Partners’ jobs.” The letter went on: “We are rethinking our head office space to cement more flexible working that has become a feature of the crisis, and will be relinquishing Partnership House in London.”
On the bonus, Ms White said: “As things stand, it is hard to see the circumstances where we will be able to pay a bonus next year. I know this will be a blow for partners who have made sacrifices these past months.” Britain’s biggest partnership runs 50 department stores, including its flagship in Oxford Street, Peter Jones in Sloane Square, as well as Waitrose supermarkets.
Today it announced plans to reopen a further 10 stores, including Oxford Street, in mid July bringing the total trading again to 32.
THE NEW chairman of John Lewis is to take an axe to stores, jobs and the retail group’s London headquarters in a cost-cutting drive, the Evening Standard can reveal.
In a bombshell letter to staff, Sharon White this week told 80,000 staff at the mutual, which also includes Waitrose, that its prized bonus will likely be ditched next year as the company wrestles to improve profitability.
At the start of the Covid crisis, sources at the group warned it was unlikely all 50 of its department stores would reopen after the lockdown. White confirmed plans to close several unnamed shops, with staff informed in mid-July. Some 32 stores have reopened since non-essential retailers were given the green light to reopen on June 15.
In the letter, seen by the Standard, White said: “The difficult reality is that we have too much store space for the way people want to shop now. As difficult as it is, we now know that it is highly unlikely that we will reopen all our John Lewis stores.
“Regrettably, it is likely that there will implications for some partners’ jobs. We are in active discussions with landlords about ending some leases and renegotiating others to make the terms more flexible.”
One of two large offices in Victoria, normally home to 450 staff, will close. “We are rethinking our head office
space to cement more flexible working that has become a feature of the crisis, and will be relinquishing Partnership House in London,” White said. The adjacent office at 171 Victoria Street, with 2400 staff, will stay open.
Trading has not been as bad as management’s worst case scenario, and furlough costs and a yearlong business rates holiday have helped cut costs. But White warned that she expects trading to get tougher as competitors reopen. “There is clearly a lot of uncertainty but as things stand, it is hard to see the circumstances where we will be able to pay a bonus next year. I know this will be a blow for partners who have made sacrifices these past months,” she said.
In March, John Lewis revealed annual profits slumped 23% to £123 million and it slashed its annual bonus to 2% of salary, the lowest since the payment was skipped in 1953.
White last week named a senior Co-Operative executive, Pippa Wicks, to head John Lewis while former Sainsbury’s director James Bailey was hired in April to run Waitrose.
The former Ofcom boss kicked off a strategic review on joining in February, and its results are due at the end of this month with staff to be informed in the autumn. A restructuring of its “technology and change” function, paused at in lockdown, has recommenced.
Yesterday John Lewis informed 244 IT staff in Bracknell it is outsourcing their jobs, and they will switch to Indian tech giant Wipro in November.
White added: “We are also seizing opportunities to regrow; exploring how we best use our department store space to meet the needs of our customers — formats and locations, non-retail use, more combined Waitrose/John Lewis shops, different category mixes, and higher investment in stores where we can improve value to customers.”
She said the company is working on growing its Home department online; its Waitrose.com division, which will find itself competing with longstanding partner Ocado’s M&S joint venture in the autumn; and improving customer service. It is ramping up plans to stock more John Lewis products in Waitrose stores and online. John Lewis’s online sales were around 40% of revenues pre-Covid and, after becoming 100% during lockdown, White believes it is a “reasonable assumption” that online could account for as much as 60% to 70% of the chain’s total sales this year and next.