The John Lewis Partnership has warned of job cuts and is scrapping staff bonuses for only the second time in its history after losses rose to £234m in a “very tough year”.
Chairperson Dame Sharon White said the struggling retail cooperative, which runs the department store chain and Waitrose supermarkets, would need to cut costs aggressively to turn around its financial performance.
“As we need to become more efficient and productive, that will have an impact on our number of partners,” she told partners in a letter.
“That’s a massive regret to me personally.”
Inflation was the main reason, she said, while Waitrose in particular was hit by non-Brexit-related supply chain problems and a fire at a warehouse in Milton Keynes.
No details have yet been given on job cuts; the 159-year-old group is in the middle of a five-year recovery plan and this week appointed Nish Kankiwala as its first ever chief executive after the sudden departure of executive director Pippa Wicks earlier this year.
JLP recorded a £78m loss for the year to 28 January – slumping from a £181m profit the previous year – worsening to £234m once additional costs such as significant write-downs on retail properties were taken into account.
Waitrose sales declined by 3 per cent to £7.3bn, while John Lewis recorded 0.2 per cent growth to £4.94bn.
JLP plans to triple its cost savings target from £300m to around £900m by January 2026 and said the savings are likely to include an extra £236m from “simplification”.
“You’ve been exceptional in what has been another very tough year,” White told partners. “Two years of pandemic and now a cost of living crisis.”
“The mantra for the year is cost out, margins up and customer focus,” she said. “Simplifying the way we run Waitrose shops – less time on process, more time with customers. Investing in data and loyalty so we can give customers more of what they want.”
Previous simplification efforts included changes to its head office, which resulted in 1,500 jobs being cut by 2021.
Josh Holmes, senior consultant at Retail Economics, said: “These results are worse than expected, with both Waitrose and John Lewis seeing profits retrench as inflation sends costs spiralling.
“John Lewis has been underperforming for some years now and regular shake-ups at management level have not helped. Bringing in a new CEO is the latest admission that the turnaround plan is not on track, with significantly more work needed to put the business back on top.”
Renewed focus on customers could work if properly implemented, said George MacDonald executive editor of Retail Week. “Proof will be in the pudding when costs are out of the way,” he said.
