John Lewis Partnership Plc cancelled staff bonuses for the second time in three years and warned of fresh job cuts after reporting a large loss amid intense competition in the British retail market.
The owner of the John Lewis department store and upmarket grocer reported a £234 million ($283 million) loss for the full year, driven in large part by a big writedown on the value of its struggling Waitrose stores. It’s only the second time since 1953 that staff haven’t received a bonus.
John Lewis and Waitrose are finding it difficult to attract shoppers as Britain’s cost-of-living crisis makes consumers more thrifty with their money, leading them to budget fashion brands and discount grocers.
Sales at Waitrose fell 3% last year and John Lewis sales were mostly flat indicating how tough the fight for customers is during the country’s worst inflation crisis in decades.
Waitrose is struggling to attract customers as it was slower than competitors to keep a cap on rising grocery prices. The supermarket didn’t announce any price freezes until last month when it pledged to spend £100 million reducing prices.
In a bid to get a grip on the problems, John Lewis appointed a chief executive officer for the first time in its history to boost its overhaul efforts.
New CEO Nish Kankiwala will work with Chairman Sharon White, who joined the retailer in 2020 and kicked off a turnaround plan which involves shutting stores, cutting jobs, selling assets and investing in new areas, such as housing.
Kankiwala has led previous turnaround efforts as CEO at bread maker Hovis Ltd and through a senior role at Burger King Corp. One of his tasks will be to find a permanent replacement for John Lewis executive director Pippa Wicks who left abruptly last month after less than three years in the role.
“John Lewis has been underperforming for some years now and regular shakeups at management level have not helped,” said Josh Holmes, senior consultant at Retail Economics. “Bringing in a new CEO is the latest admission that the turnaround plan is not on track, with significantly more work needed to put the business back on top.”