John Lewis warns that not all stores will open after lockdown after first ever annual loss
The John Lewis Partnership has warned over further department store closures after the pandemic sent it plunging to its first ever annual loss.
The group, which also owns upmarket grocery chain Waitrose, said it does not expect all its John Lewis shops to reopen at the end of lockdown and expects results to get worse over the year ahead.
It did not say how many of its 42 John Lewis shops are under threat, confirming it was in talks with landlords and will make a final decision at the end of March.
Recent reports suggested another eight stores were earmarked to be shut, on top of eight announced in July. It has also received provisional planning permission to convert a large part of its Oxford Street store into offices.
The group confirmed the previously announced move to scrap its staff bonus for the first time since 1953 after tumbling to a £157 million pre-tax loss for the year to 30 January against profits of £146 million the previous year.
It marked the first loss in the group’s history dating back to 1864.
Chairman Sharon White said: “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 are currently in discussions with landlords and final decisions are expected by the end of March.
“We will do everything we can to lessen the impact and will continue to provide community funds to support local areas.”
The announcement signals that further jobs could be at risk, after 1,300 were impacted by store closures last summer.
A John Lewis spokesman said the group would always try to redeploy elsewhere in the business, with redundancies a “last resort”.
John Lewis said its results will get worse in the current financial year as it looks to invest £800 million in the business as part of an overhaul to turn around its fortunes, which will only partially be offset by annual cost savings of £300 million.
The group said it wants to restart staff bonuses as soon as profits recover to at least £150 million on a sustainable basis.
It hopes to be back to profit in 2022-23, with £200 million next year and £400 million by 2025-26.
“The coming year is a crucial one in our five-year turnaround of the partnership as we set ourselves back on the path of sustainable profit,” it said.
It slumped to the loss over the past year after taking massive writedowns on the value of its shops due to the coronavirus crisis, which has devastated Britain’s high street and shifted sales online.
The group has been helped by £190 million in Government emergency support, including business rates relief and furlough for workers. It confirmed it will keep business rates relief, but keep it under review.
Results laid bare the pain suffered in its department store arm, with like-for-like sales flat while earnings slumped 25% to £554 million.
But its Waitrose business saw comparable store sales rise 10% and earnings lift 8% to £1.1 million as its non-essential supermarket shops were allowed to stay open.