The new chairman of John Lewis & Partners has warned that it could take up to five years to revive the employee-owned group hit by sliding profits, and that she would have to shut more shops.
Sharon White, former head of UK telecoms and media regulator Ofcom who succeeded Charlie Mayfield last month, launched a strategic review as the department stores and supermarkets group reported a 23% drop in annual profit, a third straight fall.
The group also said it would pay its 80,000 workers, which it calls partners, a bonus of just 2% of salary - the lowest since 1953 when it did not pay one.
Review Plan
White's review will focus on how the group can strengthen its businesses and develop new services outside retail.
It will look at 'right sizing' its store estate - currently 50 John Lewis stores and 338 Waitrose branches - through a combination of new formats and new locations; repurposing and space reductions of existing stores; and closures.
Waitrose & Partners is to close its stores in Helensburgh in Argyll and Bute in Scotland, Four Oaks in the West Midlands, and Waterlooville in Hampshire.
The store in Helensburgh will close in May 2020, while the outlets in Four Oaks and Waterlooville are likely to close in June.
Director of selling and service delivery at Waitrose & Partners, Simon Burdess, said, "We haven’t taken this decision lightly but we have to do what’s right for the business as a whole. Despite the best efforts of everyone involved, we haven’t been able to find a way to make these shops profitable in the long term.
All 403 partners working at these stores will enter a period of consultation to decide a future course of action, Waitrose said in its statement.
"Our priority now is the wellbeing and future of our Partners in these shops. We will do everything we can to support them and will explore opportunities for anyone wishing to remain with the Partnership," Burdess added.
Annual Results
The group reported a pretax profit before one off items and partnership bonus of £123 million ($159 million) in the year to 25 Jan 2020, down from £160 million in 2018-19. Gross sales fell 1.5% to £11.5 billion.
While core operating profit at Waitrose grew by £10 million to 213 million, it slumped by £75 million to £40 million at the John Lewis chain, reflecting weak sales in home and electricals, investment in technology and higher staff costs.
Finance chief, Patrick Lewis said the partnership was planning for the market to remain volatile but had made a solid start to the new financial year with sales growth in both John Lewis and Waitrose and margins steady.
He attributed an increase in food demand at Waitrose stores this week to the coronavirus outbreak and said there had been an increase in online demand as a proportion of trade across the group - a sign consumers are trying to limit social contact.
He said products most in demand were hand sanitisers, soap and tissues.
