John Lewis Partnership insists transformation plan ‘on track’ despite £234m loss
Inflation hit the John Lewis Partnership “like a hurricane”, says chair Sharon White, with “strong sales” at John Lewis offset by declining sales at Waitrose.
The John Lewis Partnership, parent company of both the John Lewis and Waitrose retail brands, has reported a £78m loss for 2022. After “exceptional costs”, notably a write-down in the value of Waitrose stores, the group made a loss of £234m.
Despite these losses, chair Sharon White insisted the company’s five-year transformation plan is “on track” in a call with media today (16 March).
This is only the group’s second-ever full-year loss and compares to a profit of £181m in 2021. For the year ending 28 January 2023, total sales were down 2%, reflecting “strong sales” at John Lewis and a decline of 3% at Waitrose.
Inflation hit the John Lewis Partnership “like a hurricane”, said White, who added that “nobody could predict” the impact it would have over the last 12 months.
“But we are confident, which is why we’re continuing to invest substantially in both brands and our diversification,” she said.
John Lewis says new brand promise is ‘fundamental’ to its turnaroundLast night (15 March) the group announced its first ever CEO, Nish Kankiwala, who will start on 27 March. Between 2016 and 2022 he was CEO of bread brand Hovis, and has also held senior leadership roles at brands including Burger King, PepsiCo and Unilever. He has been on the board of the John Lewis Partnership since 2021.
A “huge focus” for the next two years is “supercharging” the business’s efficiency programme – otherwise known as ‘Lean, Simple, Fast’ – into converting more of its sales into profit, said White. Kankiwala will “provide some balance in terms of that pace and that execution,” she added.
The company spent £500m on its transformation last year. White reiterated the business’s commitment to its strategy, despite the loss.
“Far from diverting us from the Partnership Plan, the economic backdrop has galvanised us to go faster,” she said.
The leaders of John Lewis and Waitrose had previously reported into White, but now will report directly to Kankiwala.
“The new structure allows me to focus on the preservation of the partnership model and our distinctive character, on the strategy for the partnership and our big commercial choices,” White explained. “Nish will draw on his significant transformation experience to drive performance and profitability day to day.”
Waitrose unveils brand refresh in bid to become ‘more relevant’Last year, John Lewis retired its ‘Never Knowingly Undersold’ brand promise under the leadership of its former executive director Pippa Wicks, who left the brand in February. It replaced the tagline with ‘For All Life’s Moments’.
New executive director Naomi Simcock said the brand is “encouraged with the results” of the rebrand. “We’ll push into that more this year,” she added, emphasising how the brand is dialling up on being there for its customers “every day” by expanding into the family market.
Meanwhile, Waitrose’s brand repositioning under the ‘Food to Feel Good About’ platform was unveiled last September. James Bailey, Waitrose’s executive director, said today that there’s “a lot more to come in the following year” with the brand, which is finding itself to be “a little punchier” about what makes it unique.
The group claims it had 800,000 more shoppers in 2022 than the previous year, but they are spending less. Recent Kantar data for the 12 weeks leading to 19 February 2023 shows Waitrose’s grocery share fell to 4.7%, down from 5% over the same period 12 months earlier.
Meanwhile, discounter Aldi’s market share rose to 9.4%, up from 8%, and Lidl’s jumped from 6.1% to 7.1%.
“Contrary to popular belief, Waitrose customers are very similar to everyone else’s customers, so they’re not immune to the challenges of inflation and everything else,” said Bailey.
Acknowledging the move to discounters, Bailey said: “I think if you look at the Kantar numbers, most supermarkets last year have seen some of their customers shopping on a budget and sometimes that involves shopping in discounters.
“So I don’t think we are more or less exposed to that than anyone else,” he added, noting that the brand is “committed to what makes [it] different”.