Employee-owned retailer John Lewis Partnership has axed its staff bonus and warned of job cuts as it posted a £234m pre-tax loss following a “tough year”.
The department store firm, which also owns Waitrose supermarkets, said it had been hit by soaring inflation, with costs up almost £180m on the previous year, and shoppers feeling the pinch, knocking sales by 2% to £12.25bn.
In a letter to the partners, chair Sharon White said the there had been strong sales at John Lewis department stores but a decline of 3% at Waitrose, “reflecting that we had more customers – 20 million of them, 800,000 more than last year – but they bought less“.
The big online growth of the pandemic years was partly reversed, she added, as shoppers shifted some of their grocery spending to the discounters.
White said her team had taken steps to deal with the challenges – both in terms of helping staff with a £500 (pro rata) cost of living payment and free food over the winter, and with efforts to cut costs by negotiating better deals with suppliers and simplifying ranges in both brands.
But the business also had product supply challenges and a major fire at its our Brinklow warehouse hit availability in Waitrose last summer. This was recovered through autumn and availability is now strong, said White.
“All in all,” she added, “this has made for a tough set of results. We made a loss of £78m. When you add in exceptional costs – the biggest one being a write down in the value of Waitrose stores – the loss was £234m. Our balance sheet remains strong – £1bn of cash and access to a £420m credit facility, like an overdraft, if we need it.
“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 economic crisis is speeding efforts to transform the business, with £500m invested last year into developing and diversifying the brands. Initiatives range from expanding Waitrose in the convenience market through tie-ups with Dobbies garden centres and Shell, to the relaunch of pet insurance in the partnership’s financial services arm.
But White warned: “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. It’s particularly tough in the Partnership, when everything we do is with one goal in mind: ‘happier people, happier business and happier world’.”
White has also announced the appointment of Nish Kankiwala as the new CEO of the business. A non-executive director of the John Lewis Partnership since April 2021, Kankiwala is a former CEO of Hovis and has held senior roles at Burger King and PepsiCo.
He takes up his new role on 27 March and remains a member of the board.
“I’m delighted that Nish is to be chief executive,” said White. “Since joining the board in 2021, Nish has developed a deep understanding and appreciation of the partnership model and has provided counsel on our transformation. He will be able to supercharge this in his new role while protecting the partnership’s ethos.“
Kankiwala said: “It’s a great privilege to be appointed as chief executive following two rewarding years on the partnership’s board as a non-executive director. I am looking forward to playing an even fuller part in the transformation of the partnership, to be a modern business loved by customers and treasured by our partners.”