John Lewis has abandoned its loss making move into housebuilding five years after it was launched by former chair Dame Sharon White.
The department store and Waitrose supermarket retail partnership said it was withdrawing from its foray into the property sector after” a fundamental shift in the economic conditions that underpinned the venture.”
The move came as part of a broader strategic decision to “refocus on the partnership’s core retail brands.”
The surprise diversification was announced by Dame Sharon in October 2020 when she revealed plans to develop 10,000 build-to-rent homes over the next decade as part of major strategic pivot aimed at generating 40% of profits from outside retail by 2030.
Nina Bhatia, strategy director at the staff-owned group said in 2023. “At a time when there is a housing crisis and people want homes to buy or rent we are making a huge contribution. John Lewis is offering quality service and security in a high quality home.”
Three schemes were launched under the initiative with successful application for approximately 1,000 homes in Bromley, West Ealing and Reading. It also took on management of four buildings owned by fund manager Aberdeen.
However, John Lewis has struggled to make money out of its property market operations. Financial results from the BTR subsidiary for the 12 months to January showed it made posted a pre-tax loss of £406,000.
The John Lewis Partnership has announced it is withdrawing from its Build to Rent property business, citing a fundamental shift in the economic conditions that underpinned the venture when it launched in 2020.
A John Lewis Partnership spokesperson said: “Our rental property ambition was based on a very different financial environment: one with more stable investment returns, lower borrowing costs and more affordable costs to build homes. Unfortunately, the current climate - higher interest rates, inflationary pressures and a more cautious property market - has meant the model no longer meets the Partnership's investment criteria.
“Since we embarked on the rental property plans in 2020, we have made significant progress with our core retail strategy. This has seen us invest heavily in our customer offer for our unique brands John Lewis and Waitrose, simplifying our business and strengthening our balance sheet. The strategy is progressing well and involves modernising our stores, enhancing our digital platforms and improving our supply chain to provide the best possible quality, service and value to our customers. We remain committed land owners in our communities and continue to invest significantly in our property assets and retail offer.
“We’re proud of what we’ve achieved in terms of progress with three planning applications and managing third party BTR homes for residents to a high standard. We will fulfil our existing management contracts at four BTR sites as part of a responsible transition out of the business.”
