John Lewis has reported a £517mn pre-tax loss for last year and warned that further store closures are to come, as the partnership faced £648mn of exceptional costs, primarily as a consequence of the value of its stores being written down.
The company has also undergone restructuring, a redundancy programme; in November 2020 it said 1,500 jobs would be cut at the John Lewis head office.
John Lewis has not revealed how many of its remaining 42 stores may face closure, as it continues talks with landlords with a view to reaching a decision by the end of March. In July 2020 the company closed eight stores as coronavirus lockdown took a dramatic toll on British retailers and it is expected to close at least eight more this year.
John Lewis stores which closed in the past year are located in Watford, Croydon, Swindon, Tamworth, Newbury, Heathrow Terminal Two, London St Pancras and Birmingham.
Chairman Sharon White wrote in a letter to John Lewis partners: “The past year has been one of the most challenging in the partnership’s history… There is no getting away from the fact that some areas can no longer profitably sustain a John Lewis store. Regrettably, we do not expect to reopen all our John Lewis shops at the end of lockdown, which will also have implications for our supply chain. We will do everything we can to lessen the impact and will continue to provide community funds to support local areas.”
John Lewis and Waitrose have been criticised for not returning some £170m in business rates relief it received from the Government, in line with other supermarkets, but as the tills rang at Waitrose, the John Lewis side of the business has been under severe pressure from the closure of non-essential retailers.
The partnership scrapped its staff bonus for the first time since 1953 and does not intend to reinstate it until annual profits reach £150m “on a sustainable basis”.
Since starting at John Lewis, Dame Sharon has hired a number of top executives in the hope they can engineer a turnaround of the business. Last October a plan was launched to boost online sales by reducing prices in an effort achieve £400m in profits over five years. The company has also moved into affordable housing and financial services, whilst controversially branching out into garden centres.
The employee-owned retailer is also thought to be considering the opening of John Lewis sections in most Waitrose stores by the end of next year.