Having announced the appointment of its first CEO, John Lewis Partnership (JLP) which posted a full-year loss of £234m following a mere 0.2 per cent rise in revenues at John Lewis and a 3 per cent drop at Waitrose, the business is now poised to further cut costs. This latest round of cost reductions is likely to see a number of jobs at risk to add to the disappointment to the workforce which won’t be seeing a bonus.
When it comes to the issue of the bonus and the structure of the business in which employees as classed as partners, this came about in 1950 when the company was placed in a trust to equally benefit all staff who would each receive the same percentage of their annual salary from company profits each year. Reports are that Dame Sharon White, chair of JLP, is now reviewing the option of changing the structure of the business – currently employee owned – in order to raise funds for investment in systems and data. This move is unlikely to be well received by the partnership council comprising of sixty employees, as any funds raised would be invested in the business, rather than directly benefit staff members. There could also be a long-term impact on the potential for bonuses in the future. (The last time such a radical move was suggested, in 1999, it was overthrown by the partnership council). Whilst times have certainly changed, this could well still be viewed as being a step too far for many.
Market watchers say that both John Lewis and Waitrose each have too many stores and that competitors led by seasoned retailers are making gains at JLP’s expense. Also that John Lewis could and should have capitalised on its department store status, having seen most of its directly competitive stores — like Debenhams and Frasers, disappear from towns and cities around the country. Instead, it seems that both M&S and Next are taking the demand as they rapidly expand the number of third-party brands stocked to become more attractive destination stores.