Five Waitrose stores to close after John Lewis issues warning on profits

Group blames market uncertainty and IT investment for ‘substantially’ lower profits

The John Lewis Partnership has said it will make no profit in the first six months of this year and is to close five Waitrose stores as tough trading on the high street takes its toll.

The group, which operates 50 John Lewis department stores and 350 Waitrose shops, said full-year profits for the year to January 2019 will also be substantially lower than last year.

JLP blamed the likely fall on market uncertainty and significant extra costs as it invests in IT and suffers the pinch from Brexit-fuelled inflation, at a time when it has been forced to cut prices because of widespread discounting by ailing competitors.

The group said it would be gradually slimming down its high street presence over time, beginning with the sale of four Little Waitrose convenience stores to the Co-op and the chain’s supermarket on Camden High Street, north London, to Aldi, which will affect about 200 staff.

The convenience stores changing hands are in Spinningfields and near Piccadilly station in Manchester, Colmore Row in Birmingham and Portman Square in central London.

While John Lewis said it had no plans to carry out the kind of mass closures happening at rivals House of Fraser and Marks & Spencer, at least two department stores are also to be slimmed down in size – including Peterborough – as the retailer said it was looking at leasing space to other retailers.

John Lewis/Waitrose logo
The stores are to change their branding over the next five years so that both chains include ‘& partners’ in the name. Photograph: John Lewis

Sir Charlie Mayfield, the JLP chair, said the difficulties being experienced on the high street were not short-term: “It is very important that we feel the jeopardy of what is happening right now. This isn’t a blip, it is a major shift and it has a while to run.”

Waitrose is expected to achieve profit growth but that will be offset by a decline at John Lewis in the year ahead. The group said it hoped to bounce back after 2019.

The group said: “It is widely acknowledged that the retail sector is going through a period of generational change and every retailer’s response will be different. For the partnership, the focus is on greater differentiation, not scale.”

To emphasise that difference, the stores are to change their branding over the next five years so that both chains include “& partners” in the name.

John Lewis will ditch its trademark green and white and Waitrose its lime and grey in favour of black and white livery. The change, which will kick off in September, will be combined with an increased emphasis on service from its employee-owners as a way to fight the competition.

Mayfield said John Lewis was aiming to bring in more own-label and exclusive brands as well as improved services such as personal shoppers in the department stores and trained baristas or diet experts in the supermarkets.

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“We are determined to be innovators and disruptors in this market,” he said. “This is no time to bring the legions closer to Rome. You can’t win defensively but [only] by developing newness and innovation.”

In order to fund revamped stores, online and IT development and lower prices with £400m to £500m of investment a year, the group will be cutting costs at its head office, stopping investment in new stores, reviewing its pension arrangements and reining in marketing spending.

Retailers have been hammered by rising costs and falling consumer confidence, with several high-profile casualties this year resulting in hundreds of store closures. Chains, including House of Fraser, New Look, Carpetright and Mothercare are closing stores, with thousands of jobs at risk, as a result of higher costs and a shift to buying online.


Sarah Butler and agency

The GuardianTramp

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