THE JOHN Lewis Partnership today ruled out any plan to spin off successful supermarket arm Waitrose as it bounced back to profit after a rough period.
But the board doesn’t feel results are strong enough to merit paying partners a bonus, for just the third time in its history.
Last year the bonus was also zero as the company fell to a loss of £78 million as chair Dame Sharon White fought to rescue a business which, while beloved, was struggling to compete with Amazon and other online retailers.
Today it reported a profit of £42 million, a £120 million turn around which suggests a bonus was affordable. Instead, JLP is investing £116 million in partner pay, a rise of about 8%. Job cuts, of perhaps 11,000, have been mooted but not confirmed.
Sales across the group rose 1% to £12.4 billion. Waitrose sales rose 5% to £7.7 billion, while John Lewis sales fell 4% to £4/8 billion.
Costs cuts of £900 million are being sought by 2028.
White will move on by February next year, or perhaps sooner if a new chair is found.
Chief executive Nish Kankiwala told the Standard: “We feel very positive about trading. We saw a million more customers through our doors. We have good cash flow to invest in growth, we have momentum.”
He later added: "We're looking at all the opportunities as we improve our ways of working and if there is eventually a reduction in roles, then we'll use (staff) attrition in the same way as we have done in the past.
"If there are unfortunately, regrettably, redundancies then we'll talk to our partners first."
Some in the City think JLP should sell Waitrose, perhaps listing it on the stock market.
Kankiwala was blunt. “We are not going to do it. The brands are best together. It is one partnership with two fantastic brands.”
Department stores have found life hard for years – Debenhams and House of Fraser becoming small parts of Mike Ashley’s Frasers Group empire.
Yanmei Tang, analyst at Third Bridge said: "The department store industry continues to struggle amid a cost-of-living crisis. Our experts say John Lewis, with its significant reliance on home sales for revenue, may face even greater challenges ahead. The persistently sluggish housing market is unlikely to provide any relief. John Lewis also faces stiff competition from online giants like Amazon, as well as newcomers such as M&S and Next. They need to maintain its differentiation in assortment and keep real exclusivity of some of the brands.”
Store closures are likely as John Lewis builds its online presence.
White says: “This year we will unashamedly focus on investing back into our retail businesses for our customers, including opening new Waitrose shops and continuing to modernise our brand offering in John Lewis, while prioritising pay for our Partners”.
Robyn Duffy, senior analyst for consumer markets at RSM UK said: “John Lewis is back in the black, but there are hard yards to travel before the retailer can confidently hail a return to form. Divisionally, the food arm of the business Waitrose is performing well after recovering from last year’s availability issues, but needs a cash injection to really compete with its rivals. As for John Lewis, the theme is ‘loafers, not sofas’ with consumers spending more on themselves rather than their homes.”
