By The cost-of-living crisis has been blowing a chill wind through the retail sector but has whipped up a hurricane of problems for John Lewis.
Although the high street has shown pockets of resilience among retailers offering value-for-money essentials, the nice-to-have items which are John Lewis’ bread and butter have been dropping out of shopping baskets fast.
Waitrose, in particular, has been sideswiped by the trend, with essentials rather than treats a priority, shoppers have been putting less in their trollies and decamping to cheaper stores.
Although a big chunk of the losses were due to a write down in the value of Waitrose stores, if you strip out exceptional items, losses still came in at £78 million, compared to a £181 million profit last year.
The wool rug has been pulled from underneath the prized annual bonus again, after it was restored last year, as losses have ballooned.
The post-pandemic splurge of lockdown savings couldn’t be maintained, as disposable budgets have been eaten up by rising bills.
We may be spending more overall, as goods are more expensive, but in terms of volumes, retail sales are still below pre-pandemic times.
With more money being taken out of the economy through tax increases, consumers are likely to continue to rein in expenditure.
Punishingly high energy bills to keep lights on in vast stores and refrigerators whirring at Waitrose will also have come at a high cost.
With department store footfall dwindling as retail parks continue to draw shoppers away from high street, John Lewis is sensible to be shrinking store footprints to find more diverse revenue streams from a property portfolio.
It’ll mean it will become less of a retail lynchpin but offers a greater chance that John Lewis will stay a feature on the high street and in shopping centres for many more years to come.
But there is clearly a long way to go before efficiencies come through and the new property side of the business can start turning consistent revenues.
The appointment of Nish Kankiwala as CEO is designed to inject more energy into the pursuit of profits.
Sharon White, as chairman, is still the steady hand on the tiller guiding the chain through some turbulent retailer waters. But it’s clear there needs to be a razor-sharp focus on fresh lines of revenue.
Comments