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John Lewis appeared to backtrack on Dame Sharon White\u2019s original turnaround plan as CEO Nish Kankiwala vowed to focus \u201cunashamedly\u201d on retail after the partnership posted its first profit in four years.<\/p>\n
The retail group scrapped the partnership\u2019s previous target of 40% of profits coming from non-retail ventures by 2030 in its \u201crefreshed\u201d strategy for the business.<\/p>\n
The partnership said it was not setting a specific target or timeline \u201cfor the scale of our broader business\u201d, which includes plans to build 10,000 rental homes and expanding its financial services arm.<\/p>\n
Despite only just returning to the black, Kankiwala says the partnership is \u201cabsolutely on target\u201d to increase its profits tenfold to \u00a3400m by 2027\/28.<\/p>\n
Retail Economics chief executive Richard Lim argues this is still a \u201cvery ambitious goal\u201d but believes that the refocus on retail is \u201cabsolutely the right strategy\u201d.<\/p>\n
\u201cPart of the challenges the business has faced over the last few years has been that ambition to diversify and look at areas outside of retail to grow revenues because its been a distraction.\u201d<\/p>\n
The partnership\u2019s finance director B\u00e9rang\u00e8re Michel says the business is in \u201cgood financial health\u201d in pursuing the rest of its turnaround strategy and\u00a0has secured the funding it needs for the remainder of the plan, helped by a \u00a3260m injection of cash from the sale and leaseback of 11 Waitrose stores and a new term loan.<\/p>\n
This means the partnership has also put to bed the much-criticised plan to potentially sell a stake in the business to fund its transformation.<\/p>\n
\u201cWe\u2019ve secured the funding we need for the four years of the plan. Of course we need to achieve our financial targets every year but we have confidence that we will do so based on the return to profit that we have just had and therefore the Partnership is to remain fully co-owned,\u201d she says definitively.<\/span><\/p>\n Plans for the partnership this year include a record \u00a3542m investment \u2013 up 70% on last year\u2019s commitment \u2013 into bolstering operations, with around 95% being spent on its John Lewis and Waitrose businesses.<\/p>\n Executive director James Bailey says this will include a mix of main and convenience stores, and will focus on areas where the brand is \u201cunderserved\u201d.<\/p>\n \u201cOur optimism comes from research and a lot of work we\u2019ve done to work out where those shops will be and how much demand there is out there. We believe we\u2019ve got lots and lots of opportunities to reach new customers,\u201d he says.<\/p>\n Waitrose is also looking to refurbish 80 of its existing supermarkets as part of a near \u00a31bn investment into \u201crenewing and refreshing our shops for our customers\u201d, says Bailey.<\/p>\n The grocer has started trialing a new format with \u201csome tests on the ground\u201d including at its Sudbury store in Suffolk, adding that a \u201csubstantial amount of that newly refurbed future-facing store will arrive next year onwards\u201d.<\/p>\n \u201cThere are all sorts of changes involved: making the shops brighter and lighter, more engaging for customers, revamping and doubling down on our counter and our service proposition,\u201d he points out.<\/p>\n Sister chain John Lewis will also be receiving new store fits in some of its locations.<\/p>\n The department store\u2019s newly appointed executive director Peter Ruis says the retailer is investing in 160 new shop enhancements \u201cin partnership with some of our suppliers and brands\u201d.<\/p>\n \u201cA typical example would be doubling the size of our beauty hall, which will happen in the autumn in Oxford Street. Those types of \u2018interventions\u2019 across our estate are happening every single month,\u201d he explains.<\/p>\n New store fits will be supplemented by new technological enhancements to support customer service, including headsets which are being rolled out across teams.<\/p>\n Ruis\u2019 plans for the department store also include growing its third-party brands across beauty, fashion, home and even hospitality.<\/p>\n \u201cWe\u2019ve seen continued growth of third-parties including [flooring specialists]The Floor Room and Randox health clinics and we\u2019re working with key hospitality partners such as Ori and Benuga,\u201d he says.<\/p>\n The newly-appointed director says the retailer has seen \u201cgreat success\u201d from the recent addition of beauty brand Sol De Janeiro and from its over 170 new brands that launched at the store in the past year, including Rag & Bone, Equipment, and Vivere by Savanah Miller.<\/p>\n Ruis says there\u2019s \u201cat least 80 new brands\u201d arriving at John Lewis for 2024.<\/p>\n Inflation may be easing, but value remains incredibly important to consumers and the partnership is keen to tap into this.<\/p>\n Waitrose boss Bailey says the grocery chain is looking to build on its momentum of investing \u00a3100m into core pricing for customers.<\/p>\n The supermarket launched its \u00a35 sandwich meal deal last August, which according to the partnership, has attracted an extra 22,000 customers every week,<\/p>\n Ruis says that value remains at \u201cthe centre of our gravity\u201d at John Lewis.<\/p>\n \u201cWe continue to really focus on having a really good opening price, of which Anyday is part of, and that continues to be important for us. You\u2019ll see a significant amount of our proposition with that strong opening price position. And then we continue to match price against our key competitors in the branded areas,\u201d he adds.<\/p>\n Elsewhere, the business is looking to launch a pan-partnership loyalty programme, which will merge the My John Lewis and My Waitrose schemes together.<\/p>\n Kankiwala says the move will \u201cbuild on the trust and lifetime value of our customers that shop our brands\u201d.<\/p>\n A key part of John Lewis Partnership\u2019s plan is becoming \u201csimpler and more flexible\u201d and productivity gains have been a core reason behind the business\u2019 profit growth.\u00a0 Over the past year, it made \u00a3111m of improvements in the year and is on track to meet its \u00a3900m productivity savings target by 2027\/28, a large proportion of which comes from upgrading its systems.<\/p>\n Kankiwala says the business \u201cneeds to modernise [its] retail infrastructure\u201d to support its growth plans.<\/p>\n This includes investing in technology \u201cunderpinned by Google Cloud-based infrastructure\u201d and improving customer-facing solutions such as shop Wi Fi and mobile ticketing for shop partners.<\/p>\n The partnership says its investment into stock management processes means product availability has improved in John Lewis and Waitrose.<\/p>\n One area the partnership is mooted to make savings is in jobs. The Guardian reported earlier this year that the group is planning to reduce its headcount by 11,000, with the number of roles expected to gradually reduce over several years via redundancies and not replacing staff who leave.<\/p>\n However, White insisted there was no target for job cuts.<\/p>\n \u201cOne of the parts of the refreshed plan is becoming simpler and more flexible as a business and that\u2019s starting to bear fruit. Inevitably, that will mean that there\u2019s less need for some roles over the coming years but there\u2019s no target for jobs,\u201d she says.<\/p>\n It\u2019s taken four years, a revised strategy, and a two-year extension to bring the Partnership back into profit.<\/p>\n White is confident that it is back on track. \u201cThe plan is working and we are making progress, turning a positive corner,\u201d she says.<\/p>\n \u201cWe\u2019re clearly not complacent \u2013 there\u2019s still a lot of hard yards to go but the hard work of the past year has allowed us to generate the cash that\u2019s going to enable us to invest for growth over the coming years.\u201d<\/p>\n Lim says he is \u201ccautiously optimistic that John Lewis has turned a corner in terms of their financial performance\u201d.<\/p>\n There is also a sense of cautious optimism within the business, with both Waitrose and John Lewis seeing more confidence from shoppers of late as inflation continues to ease.<\/p>\n Ruis says it is witnessing green shoots in the department store\u2019s hardest hit categories \u2013 home and technology \u2013 and a \u201clittle bit of a push back into big ticket\u201d.<\/p>\n \u201cWe\u2019ve had a couple of decent weeks on technology and seen some great sales on Apple, and we\u2019ve seen some uptick in furniture sales around the last couple of weeks,\u201d he says.<\/p>\n Bailey says that Waitrose customers are also becoming \u201cmuch more open minded about quality\u201d as inflation eases.<\/p>\n \u201cWe\u2019re seeing evidence of a customer shift into organic, into higher welfare, into higher ticket items,\u201d he says.<\/p>\n However, he\u2019s quick to add that people are still buying on promotion and using the My Waitrose voucher scheme.<\/p>\n There is still a long road in front for John Lewis Partnership to achieve the \u00a3400m profit promised by 2027\/28. The executive team may have their work cut out but they have certainly taken a solid step forward.<\/p>\nWhere is it investing?<\/h2>\n
Stores<\/h5>\n
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\n<\/picture>\nWaitrose is set to open its first supermarket in almost 10 years as the upmarket grocer embarks on an expansion of its store network.<\/p>\nThird-party brands<\/h5>\n
<\/p>\nValue offer<\/h5>\n
Streamlining the business<\/h5>\n
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\n<\/picture><\/p>\nIs John Lewis Partnership finally back on track?<\/h2>\n
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