After reporting a sizable deficit amid fierce competition in the British retail market, John Lewis Partnership plc warned of further job cutbacks and cancelled employee bonuses for the second time in three years.
An enormous write-down on the value of its faltering Waitrose locations contributed significantly to the £234 million ($283 million) deficit that the owner of the John Lewis department store and luxury supermarket announced for the entire year. Since 1953, there have only been two occasions when employees haven’t earned a bonus.
Because to consumers’ increased frugal spending habits as a result of Britain’s cost of living crisis, John Lewis and Waitrose are having trouble luring customers away from their competitors. Waitrose sales decreased by 3% last year, while John Lewis sales were almost steady, showing how difficult it is to attract customers during the nation’s worst inflation problem in decades.
Waitrose has a particularly hard time attracting customers because it kept rising grocery prices under control later than its rivals. The retailer didn’t declare any price freezes until it promised to spend £100 million lowering prices last month.
For the first time in its history, John Lewis appointed a chief executive officer this week to support its turnaround initiatives in an effort to get a handle on the issues. Sharon White, the retailer’s new chairman who joined the company in 2020 and launched a recovery plan that includes closing locations, slashing employment, selling assets, and investing in new fields including housing, will collaborate with the new CEO Nish Kankiwala.
As CEO of the bread manufacturer Hovis Ltd. and in a top position at Burger King Corp., Kankiwala has previously overseen turnaround initiatives. Finding a long-term replacement for Pippa Wicks, the executive director of John Lewis, who abruptly departed the position last month after less than three years in the position, would be one of his tasks.
“John Lewis has been failing for some years now and recurrent shakeups at management level have not helped,” said Josh Holmes, senior consultant at Retail Economics. The latest admission that the turnaround plan is off course and that much more work is necessary to restore the corporation to its former glory is the hiring of a new CEO.
The partnership, which is owned by approximately 80,000 workers, announced Thursday that it is stepping up cost-cutting and intends to save £600 million by 2026. Further job layoffs, which White said he “personally regrets massively,” could be one of these.
Costs increased by £180 million throughout the year as a result of growing inflation, which has been hurting the entire business.