The John Lewis Partnership slumped to a loss of £ 517 million last year and has confirmed that more store closings are on the way.
The group, which includes John Lewis and Waitrose, said it was “in talks with landlords and expected final decisions by the end of March”.
No information was given on the number of stores to be closed permanently, their locations or the loss of jobs. But it said it probably needs to be closed in places where our customers aren’t.
On a media call, bosses said they could not confirm there would be no more job losses but hinted that they could hope to reinstate partners affected by the recent series of proposed store closures.
Loss: The John Lewis Partnership slumped to a loss of £ 517 million last year
The 42-store group said, “As difficult as it is, there is no way out of the fact that some areas are no longer viable in running a John Lewis store.
“Unfortunately, we don’t expect all of our John Lewis stores to reopen at the end of the lockdown, which will affect our supply chain as well.”
Chairman Sharon White said, “Closing a business is one of the toughest decisions we can make as a partnership.
‘We are extremely sensitive to the impact on our partners, customers and communities, especially at a time when retail and our main roads are undergoing major structural changes.
“We will do all we can to reduce the impact and continue to provide community funding to support local areas.”
Without government support, JLP would have had to go through an “even bigger restructuring” which would put even more jobs at risk.
JLP said it aims to save £ 300 million a year through 2022/23, but it will also invest £ 800 million in its turnaround plans this year, which include restructuring.
The company aims to generate a profit of around £ 400 million by the end of 2026. Affiliate bonus will not be paid back until profit reaches around £ 150 million.
Online Growth: A graph from JLP shows the growth of its online shopping area
Closures: Further closings for businesses in the John Lewis partnership are in the pipeline
Hubs: New small John Lewis hubs will be located in Waitrose branches
The group said its most recent annual loss was due to “significant extraordinary costs”, namely the depreciation of the John Lewis stores “due to the major shift to online” as well as restructuring and redundancy costs from store closures and changes at headquarters.
In a call for results to the media this morning, JLP said the John Lewis stores suffered a £ 190 million decline in retail operating profit, with like-for-like sales unchanged.
Having stayed open throughout the pandemic, Waitrose’s operating profit rose to £ 1.1 billion last year.
The bosses said the group spent £ 65m in Covid-related costs last year, with £ 25m spent on partner’s illness.
In September, the John Lewis Partnership announced that it was canceling its affiliate bonus for the first time since 1953. That came when the group posted a stabbing half-year loss of £ 635m compared to a profit of £ 146m a year earlier on the same date.
Ms. White said on a media call that the past year created a “uniquely volatile environment,” which means it cannot provide a profit forecast for the year ahead.
Online shopping growth and five year plan
Before the pandemic was “propelled” from our stores about £ 6 for every £ 10 spent online at John Lewis, the group said. But since the pandemic started, that number had dropped to £ 3 for every £ 10 spent online.
John Lewis’ online sales rose 73 percent during the pandemic, and the group expects around 70 percent of purchases to be made online by 2025.
It said, “While there is clearly uncertainty as to how far these changes will continue, we expect much of the online relocation to be permanent and are adjusting business accordingly.”
On the media call that morning, Ms. White said she wanted to turn the business into a lean, easy, and fast retailer.
Turnaround Plan: Sharon White, Chairman of the John Lewis Partnership, and Chancellor Rishi Sunak