The new chairman of John Lewis Partnership warned on Thursday (5 March) it could take up to five years to revive the employee-owned retail group hit by sliding profits, and that she would have to shut more shops.
Sharon White, former head of UK telecoms and media regulator Ofcom who succeeded Charlie Mayfield last month, launched a strategic review as the department stores and supermarkets group reported a 23 percent drop in annual profit, a third straight fall.
The group also said it would pay its 80,000 workers, which it calls partners, a bonus of just 2 percent of salary - the lowest since 1953 when it did not pay one.
"We need to reverse our profit decline and return to growth," said White.
"This will require a transformation in how we operate as a partnership and could take three to five years to show results."
The John Lewis Partnership runs the eponymous department store chain and upmarket supermarket Waitrose.
White's review will focus on how the group can strengthen its businesses and develop new services outside retail.
It will look at "right sizing" its store estate - currently 50 John Lewis stores and 338 Waitrose branches - through a combination of new formats and new locations; repurposing and space reductions of existing stores; and closures.
Three Waitrose stores have already been slated for closure this year, it said - at Helensburgh in Scotland, Four Oaks in central England and Waterlooville in southern England.
Investment this year would focus on Waitrose.com, ahead of the ending of the group's relationship with online grocer Ocado in September, John Lewis online and the home offering to make it more contemporary. There will also be a greater emphasis on sustainability.
“What is not up for debate however is our employee-ownership model or the sale of either of our two brands,” White told reporters.
She added, however, that the department stores chain's Never Knowingly Undersold pledge could be "modernised".
She plans to provide an update on the review when John Lewis publishes first half results in September.
The group reported a pretax profit before one off items and partnership bonus of £123 million in the year to 25 January 2020, down from £160 million in 2018-19. Gross sales fell 1.5 percent to £11.5 billion.
While core operating profit at Waitrose grew by £10 million to £213 million, it slumped by 75 million to 40 million at the John Lewis chain, reflecting weak sales in home and electricals, investment in technology and higher staff costs.
Finance chief Patrick Lewis said the partnership was planning for the market to remain volatile but had made a solid start to the new financial year with sales growth in both John Lewis and Waitrose and margins steady.
He attributed an increase in food demand at Waitrose stores this week to the coronavirus outbreak and said there had been an increase in online demand as a proportion of trade across the group - a sign consumers are trying to limit social contact.
He said products most in demand were hand sanitisers, soap and tissues.
