The John Lewis Partnership slumped to a £517million loss last year and has confirmed that more store closures are on the way.
The group, which includes John Lewis and Waitrose, said it was ‘in discussions with landlords and final decisions are expected by the end of March.’
No details concerning the number of stores to permanently close, their locations or job losses were provided. But, it said it will probably have to close in ‘locations where our customers aren’t.’
On a media call, bosses said that they could not confirm that there would be no further job losses, but hinted that they hoped to be able to redeploy partners affected by the latest line up of proposed store closures.
Loss: The John Lewis Partnership slumped to a £517million loss last year
The group, which has 42 stores, said: ‘Hard as it is, there is no getting away from the fact that some areas can no longer profitably sustain a John Lewis store.
‘Regrettably, we do not expect to reopen all our John Lewis shops at the end of lockdown, which will also have implications for our supply chain.’
Chairman Sharon White said: ‘Closing a store is one of the hardest decisions we can make as a Partnership.
‘We are acutely sensitive to the impact on our Partners, customers, and communities, particularly at a time when retail and our high streets are undergoing major structural change.
‘We will do everything we can to lessen the impact and will continue to provide community funds to support local areas.’
Without Government support, JLP said it would have had to undergo an ‘even bigger restructuring’, putting even more jobs at risk.
JLP said it wants to save £300million a year by 2022/23, but it will also plough £800million into its ‘turnaround’ plans this year, which includes a restructuring.
The business wants to be generating a profit of around £400million by the end of 2026. A bonus for partners will not start being repaid until profits reach around £150million.
Online growth: A chart from JLP showing the growth of its online shopping arm
Closures: More closures are on the way for stores in the John Lewis Partnership
Hubs: New small John Lewis hubs will be located in Waitrose stores
The group said its latest annual loss emerged as a result of ‘substantial exceptional costs’, namely the write down in the value of John Lewis shops ‘owing to the pronounced shift to online’, as well as restructuring and redundancy costs from store closures and head office changes.
In a results call with the media this morning, JLP said its John Lewis stores suffered a £190million drop in trading operating profits, with like-for-like sales flat.
Having been able to stay open throughout the pandemic, Waitrose saw its operating profit rise to £1.1billion over the past year.
Bosses said the group forked out £65million in Covid-related costs last year, with £25million shelled out for partner sickness.
In September, the John Lewis Partnership announced that it was axing its partner bonus for the first time since 1953. This emerged as the group posted a stinging half-year loss of £635million, against a profit of £146million by the same point a year earlier.
Ms White said on a media call that the past year had thrown up a ‘uniquely volatile environment’, meaning it could not provide a forecast for profit in the year ahead.
Online shopping growth and five-year plan
Before the pandemic around £6 in every £10 spent online with John Lewis ‘was driven by our shops’, the group said. But, since the pandemic started this had dropped to £3 in every £10 spent online.
John Lewis’ online sales increased by 73 per cent during the pandemic and the group expects around 70 per cent of its purchases to be made online by 2025.
It said: ‘While there is clearly uncertainty over the extent to which these changes will endure, we are expecting much of the shift online to be permanent and are adapting the business accordingly.’
On this morning’s media call, Ms White said she wants to turn the business into a ‘lean, simple and fast’ retailer.
Turnaround plan: John Lewis Partnership chairman Sharon White and Chancellor Rishi Sunak
As part of a major five-year turnaround plan, JLP said that by 2030, 40 per cent of its profits will come from outside retail and instead be focused on areas like financial services, housing and ‘outdoor living.’
Last year eight ‘loss making’ John Lewis stores and seven Waitrose stores were permanently closed, and the group today confirmed that it is in the process of reducing the cost of its head office by 20 per cent.
In July, the group announced plans to permanently close John Lewis stores in Birmingham, Croydon, Newbury, Watford, Swindon and Tamworth, as well as hubs in Heathrow airport and St Pancras train station in London. The move triggered the loss of 1,300 jobs.
Recent reports suggested a further eight stores were earmarked to be shut, on top of eight announced in July.
Ms White said that the secret to the group’s future success, she believed, stemmed from the partnership model, ‘if we can get it right.’
Ms White said that getting back to the group’s core principles would help it get back on a stronger footing, adding that it had to adapt quickly.
‘We’ve got a heritage, a brand and trust that other businesses would kill for’, she added.
Lower prices on the way?
Bosses today confirmed that shoppers can expect to see new prices focused on ‘value’ this year.
They said that shoppers will start seeing a difference to the cost of goods across ranges when stores reopen on 12 April.
They added that further price changes will be introduced on new lines from the summer of this year.
More ‘convenient’ shopping
JLP is now making a big deal of its new idea to bring the John Lewis and Waitrose brands closer together.
It has trialed selling certain lines of John Lewis goods within Waitrose shops at five stores and is now planning on expanding this trial to more locations.
The group says that part of its problem has been people having to travel too far to get to a John Lewis store. On the media call, bosses said they may consider opening smaller, more local stores in, for example, places with vacated shops.
Top brass also confirmed that with the focus on online shopping and click-and-collect, it still had no plans to become akin to ‘Argos for the middle-classes.’
All change on our high-streets
The demise of a spate of big-name retail brands during lockdown, including Oasis, Warehouse, Topshop, Miss Selfridge and Dorothy Perkins, was accelerated by the pandemic, with shop-based retailers facing soaring costs and dwindling footfall.
Bricks-and-mortar based retailers are having to come up with new ways to lure in shoppers and drive up sales.
This week, high street stalwart Next agreed to snap up a 25 per cent stake in high-end rival Reiss for £33million, with an option to add to its holding and secure majority control.
All change: Marks & Spencer has vowed to be ‘never the same’ as it turns its business around
Marks & Spencer is another retailer which has vowed to be ‘never the same again’. Over the next three months it will start selling a further 11 brand names like Hobbs, Seasalt, White Stuff and Y.A.S online, in addition to Early Learning Centre and, among others, Nobody’s Child.
Back in January, M&S snapped up the Jaeger brand from administrators.
‘We know online shopping is growing at pace and we need to give our customers more choices and more reasons to shop at Marks & Spencer’, Neil Harrison, the director of brands at M&S, said.
In the past year, John Lewis & Partners has added 30 new fashion and beauty brands in store and online, with a further 50 being introduced, many of them independent and British-based.
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