John Lewis poised to dilute staff ownership

JOHN LEWIS is preparing to water down its decades-old staff ownership model by selling a stake to an outside investor.

The retailer, which has been run as a partnership since 1950, is reportedly exploring a sale as part of efforts by chairman Dame Sharon White to raise between £1billion and £2 billion of new investment.

Any sale could require a change to John Lewis’s constitution, meaning it would need approval by two thirds of the business’s partnership council of 60 staff. Money raised is expected to be reinvested into the company instead of being given to workers.

A deal would amount to a seismic change to John Lewis’s model, in which staff are given a share of profits in an annual bonus.

The retailer has struggled in recent years as the rise of the internet hurt clothing and homeware sales. Its supermarket arm, Waitrose, has struggled in the face of an assault on the middle classes by the German discounters and renewed success by Marks & Spencer.

John Lewis announced a £230 million loss last week and scrapped its staff bonus, while cutting around 4,000 jobs and attempting to overhaul its technology, stores and supply chain.

The partnership model means John Lewis cannot raise equity and has instead been forced to sell bonds. It already has £1.7 billion of debt on its books.

Bérangère Michel, its finance director, is said to have raised the topic of selling a stake at a meeting late last year and plans have since been developed by Dame Sharon, said The Sunday Times, which first reported the proposals.

Last week she appointed the former Hovis and Burger King executive Nish Kankiwala as the partnership’s first chief executive.

The company has previously struck a £500 million deal with money manager Abrdn to build rental properties, and was an early investor in the online supermarket Ocado.