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.
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.’
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 group said its 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.
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
In terms of online shopping, 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.’
Having been able to stay open throughout the pandemic, Waitrose saw its operating profit rise to £1.1billion over the past year.
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.
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.
In an interview via Tortoise this week, Ms White revealed 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.
All change on out 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. T
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.
Source: Daily Mail