John Lewis Partnership raised £260million to fund its turnaround, as the struggling mutual prepares for job cuts of up to 11,000 people.
The partnership that owns John Lewis department store and Waitrose supermarkets has raised new funds by taking out new bank loans and selling and leasing 11 Waitrose stores.
Separately the partnership, which is owned by 74,000 of its employees, plans to eliminate up to 11,000 jobs in the next five-year period as part its plan to reduce its cost base to £900 million.
The partnership is experiencing a period of significant upheaval after three years of losses, and cancelled bonuses. Nish Kankiwala has told partners that the partnership will focus on its core business after Dame Sharon White’s plans to diversify in rental homes and financial service were plagued with problems.
The Guardian was the first to report on possible job cuts. Last week, partners were told that their redundancy payments would be halved. Formerly, those who were made redundant would be entitled to one week’s pay for every year of service.
Partners are shocked by the changes, as they had become accustomed to John Lewis’s paternalistic approach, but now find that their once industry-leading perks have been eroded.
Sources say that the axe will fall mainly on the central London headquarters of the partnership and John Lewis. Waitrose laid off staff as part of an overhaul of the staffing hours last year.
M&G has leased 11 Waitrose supermarkets back to the partnership, including those in Exeter and Wokingham. This deal, which brings in £129million, locks Waitrose in a 20-year contract. M&G’s deal has a yield rate of 6%. CBRE provided advice on the deal.
This month, the partnership has raised more than £130m by taking on additional bank debt. The net debt of £1.9billion will be increased. The partnership has also issued a £300,000,000 bond due in January 2025.
The partnership will use the money raised for investments in its store estate, IT systemss and to speed up investment in Waitrose. A spokeswoman for the partnership declined to comment.
White, who last year abandoned a controversial plan to raise between £1 and £2 billion through the sale of a partnership stake, has now announced a new financing package.
After White announced that she would not seek reelection due to mounting pressure from within, the partnership has begun a search for new chairman. Peter Ruis, former director, was rehired as the department-store business.