John Lewis Partnership bosses have denied that they plan to separate their struggling department stores and Waitrose supermarkets. They have also ruled out the possibility of selling a share in the company to raise money.
The industry has speculated that the Mutual Group could split their food and fashion divisions, amid fears that John Lewis’ department store chain could suffer the same fate as former rivals like House of Fraser and Debenhams.
The outgoing chairwoman, Dame Sharon White of the Mutual Group, stated: “It’s not in the plan.” She also added that the company had a self-funding strategy focused on improving performance and reducing costs.
Last year, there was an outcry when revealed White, 56, was exploring the possibility to change the mutual structure of the retailer in order to sell a minor stake and raise between £1billion and £2billion of new investment.
Berangere Michel said that the idea of selling an equity stake had been put to rest. “We have secured all of the funding needed to be in a position to accelerate our growth investments.” The partnership has good financial health.
Michel, 50 years old, said that “no plans” were made to sell more assets. The group has sold its Winter Hill Golf Club located in Cookham, Berkshire. There was speculation about interest in The Odney Club which is a private members club in Cookham for retired and working partners.
A cost-cutting program of £900 million enabled the company to report a profit before tax of £56million in the period ending January. This was a significant improvement over the loss of £234million in the preceding year. It was, however, still a far cry from the £300-plus million profits that were regularly reported less then ten years ago.
After a venture into the housebuilding business and three years of losses, the employee-owned group is now focused on getting its core retail business back on course.
For the first time since 1953, the group won’t be paying a bonus to any of its 76,000 employees. The partnership announced that it would instead increase the overall pay by a’record’ £116 million, raising pay to a minimal of £11.55 per hour. This is still behind competitors such as Marks & Spencer’s and Sainsbury’s.
White, who will leave the company in February after a five-year stint, stated that the steps taken to improve business would mean “inevitably” there would be less demand for certain roles over the next few years, but there was not a specific target for job cuts.
Zoe Mills is a retail analyst with GlobalData. She said: “While the John Lewis Partnership may be grateful for its return of profitability, reporting a group profit before taxes, the troubles for its department store business aren’t over yet. John Lewis hopes to entice back lapsed customers as inflation is expected to slow down throughout 2024.
“However, John Lewis is arguably turning a corner in its profitability. The total operating profit of the fascia was up by 1.9 percent for the year after a decline of 6 percent [in the first six months of the financial period]. This, along with Waitrose’s highly positive operating profit, was not sufficient to earn a partnership bonus. However, it is an important step.