John Lewis Partnership, the owners of John Lewis department stores as well as Waitrose supermarket chain, warns that there will be close to zero profits in the first half of the year. Last year’s profits were £26.6m in the first half and the company blames heavy investment for the expected fall this year.
The partnership has also announced its plans to change the names of its stores to John Lewis & Partners and Waitrose and Partners. The partnership will also close down five shops. The name change aims at emphasizing the importance of the partners to distinguish the group from other retailers.
The rebranding is set to begin with London’s Oxford Street store in September. However, there will be closing of two Little Waitrose stores in Manchester as well as its Camden Supermarket. John Lewis says that it acknowledges the generational change that characterizes the retail sector. Therefore, the company would concentrate on greater differentiation as opposed to scale and also focus on investments in unique products and services in addition to emphasizing more on its brand.
The company does not expect to make profits in the first half of the year but given the market uncertainties, it says that there could be a wide range of outcomes. However, profits are expected to increase at Waitrose.
Earlier in March, the John Lewis Partnership reported there was a cut in the bonuses for the fifth consecutive year. As such, employees received a 5% bonus which had decreased from the 6% given last year which is also the lowest since the 4 % awarded in 1954.
Many retailers have been under immense pressure in the recent months owing to the rise in online shopping in addition to rising costs and a drop in consumer confidence. Retail experts assert that the best solution is to provide experiences that are not available in online shopping. In the case of John Lewis, a good example is personal shopping. As such, the new John Lewis store in Shepherd’s Bush in west London has up to 6 personal fashion shoppers.
According to the company’s spokeswoman, the personal shoppers generated up to one fifth of the total sales of womenswear in the store. John Lewis also intends to create a presence in the home services market which includes plumbing, electrical and financial services.
The group added that the intended changes would depend on sustained investment. The company also plans to raise a total of £500m in three years to fund its product and service innovation. The group will attain this by re-establishing profitability at the Waitrose.