John Lewis warns of job losses and scraps employee bonuses as a loss bubble

Instead of buying online, customers who have returned to the office are going to visit more local convenience stores – an area where Waitrose has traditionally been weaker than its rivals.

It said it would work to strike deals with gas stations, garden centers and local stores to take advantage of this upswing.

Dame Sharon said the results indicated the partnership was needed to “accelerate our transformation”.

Earlier this week, John Lewis hired its first-ever CEO, Nish Kankiwala, a cost-cutting turnaround expert who has been credited with reviving the fortunes of Hovis and Burger King. Since 2021 he is a non-executive director at John Lewis Partnership.

Analysts from Retail Economics said bringing in Mr Kankiwala as CEO was the “final admission that the turnaround plan is off track, with significantly more work needed to get the company back on track”.

Range needs to be scaled back

John Lewis said this week that Mr Kankiwala was brought in to boost his pursuit of profitability. On Thursday, however, it struck a more cautious note as it would swing back into the black.

Bérangère Michel, chief financial officer, said: “We hope to turn a profit, we just want to be cautious given the economic outlook.”

Inflation added £179 million to John Lewis’ costs last year.

Since then, costs in the company have continued to rise, Dame Sharon said, even as headline inflation has begun to fall, meaning John Lewis had to become “more efficient and productive.”

John Lewis said that not only is it possible to cut jobs, but the product range will also be reduced.

The Telegraph revealed last year that Waitrose had stopped stocking some Warburtons products. It also reportedly reduced the range of yogurt it stocks by 10 units.

Josh Holmes of Retail Economics pointed out the risks of sweeping change, saying it threatened to undermine the ambitious brand image and lead the partnership to “lose further ground to competitors who have invested more quickly”.

Mr Hyman said both John Lewis and Waitrose had in the past relied on their “best in class customer service – and that costs money”.

He added: “You really can’t afford to reduce your investment in that side of the business and I would say they have in recent years.”

John Lewis is also trying to reduce the range in its department stores, where it has struggled to revive growth in recent years.

Outdated storefront

John Lewis closed 16 of its department stores during the pandemic and still has 34 stores, but was criticized for not taking a more drastic approach to store closures, particularly for older stores, where it faced rising maintenance bills.

For example, rival Marks & Spencer has cut deeper on its estate in recent years and is now starting to reopen stores.

Asked if more store closures are on the horizon, Dame Sharon said: “Like any major retailer, we continue to review our stores to make sure we are in the right place to continue to do a great job for our customers. “

The partnership is under pressure to overhaul its operations and bring its aging stores up to date – something that was expected to cost a whopping £250 million for Waitrose alone.

On Thursday it said it needed to make “catch-up investments and has the potential to modernize the business at a faster pace” after growing rapidly between 2000 and 2015 to more than double the number of stores.

It brought in US restructuring experts Bain last year to help with plans to cut costs within Waitrose.

John Lewis has also started selling company assets, including the golf course, in an effort to free up cash.

It warned on Thursday that its liquidity had fallen by £473 million since the end of last year. It has debt of £350 million to be repaid within two years.

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