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.

Sign up to the daily Business Today email or follow Guardian Business on Twitter at @BusinessDesk

“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.

Contributor

Sarah Butler and agency

The GuardianTramp

Related Content

Article image
John Lewis to close more stores as Covid crisis wipes out profits
Department store group records £517m loss and does not expect to reopen all stores in April when retail lockdown ends

Sarah Butler

11, Mar, 2021 @4:40 PM

Article image
John Lewis and Waitrose owner to cut 1,000 jobs in stores
John Lewis Partnership simplifying store management structures to reduce costs by £300m a year

Sarah Butler

14, Jul, 2021 @3:42 PM

Article image
John Lewis may turn surplus stores into affordable homes
Partnership also plans to close some supermarkets and sell own-label food at other retailers

Zoe Wood

30, Jul, 2020 @3:14 PM

Article image
John Lewis to close eight more stores, putting 1,500 jobs at risk
Department stores in York, Peterborough, Sheffield and Aberdeen to shut and ‘at home’ shops in Ashford, Basingstoke, Chester and Tunbridge Wells

Sarah Butler

24, Mar, 2021 @11:37 AM

Article image
John Lewis to scrap staff bonus and cut value of stores by £470m
Move follows loss of £55m at department store chain as Covid-19 crisis offsets ‘creditable performance’

Sarah Butler

17, Sep, 2020 @4:58 PM

Article image
Five reasons why Waitrose is closing stores
The grocer is seeing more shoppers through its doors and increasing its market share, so why is it reining in expansion?

Sarah Butler

09, Feb, 2017 @5:54 PM

Article image
John Lewis denies Waitrose takeover approach by Amazon
JLP chair rejects reports about internet firm’s attempt to initiate formal talks

Angela Monaghan

06, May, 2018 @1:28 PM

Article image
The decisions facing John Lewis as it tries to halt fall in profits
Sharon White will have the challenge of a new management structure when she arrives as chair

Sarah Butler

09, Jan, 2020 @7:12 PM

Article image
John Lewis and Waitrose owner set to reduce staff bonus
Partnership, which is owned by its staff, is expected to announce annual bonus of between 6% and 7% of salary, down from 10%

Julia Kollewe

05, Mar, 2017 @4:49 PM

Article image
Waitrose boss Rob Collins steps down in £100m John Lewis cuts
Supermarket’s parent group says 75 out of 225 head office management posts will be axed

Sarah Butler

01, Oct, 2019 @4:25 PM