John Lewis not producing sufficient profit, new chief warns

The newly appointed boss of John Lewis has warned that the department store and grocery group is “fundamentally not producing sufficient profit” as a confidence vote in the chair’s leadership and revival plan approaches next month.

Nish Kankiwala, the lossmaking retailer’s first chief executive, speaking a month into his role, said rapid change was needed at the employee-owned company.

“Partners and customers love our business and want it to do better, but we’re currently not delivering the profit we need to,” he said in an interview with the Gazette, the retailer’s internal weekly magazine, seen by the Financial Times.

“Profitability is crucial so that we can invest in our partners, in our infrastructure and technology, which we’ve really got to accelerate, and because retail is so tough and competitive right now, we have to act at pace.”

The chief executive’s remarks came after the group’s “happiness” scores, recorded in a staff poll, fell below 2022 levels, as the company prepares to hold a twice-yearly vote of confidence in the strategy under the chair’s leadership.

The mutual, which owns the eponymous department stores and supermarket Waitrose, posted an annual pre-tax loss of £234mn last year with overall sales down 2 per cent to £12bn. In March, it cancelled its prized staff bonus for the second time in three years and warned of job cuts.

The retailer is two years into a turnround plan spearheaded by chair Dame Sharon White, although Kankiwala’s brief is to ensure that the “executive [team] as a whole delivers the overall commercial plan”, he said, and help to return it to profitability.

More than 45,000 employees took part in its spring survey. They highlighted that the mutual had “work to do” when it came to rewards, strategy and transformation.

A John Lewis Partnership spokesperson said: “The survey is one important way of hearing how our partners are feeling, which is core to our democratic principles. There are some encouraging results and we’ll be working closely with our partners to address the areas we need to improve.”

The partnership’s council, which represents the interests of all 74,000 employees, will cast two confidence votes on 9-10 May. These are symbolic, however, and a way of expressing the council’s view.

“One [vote is] looking back and expressing confidence in the progress of the partnership under the chairman’s leadership over the past year,” Chris Earnshaw, president of the council, said in the Gazette, “and one looking forward, supporting the chair to progress the partnership under their leadership.”

Last year one vote was held in May, relating to the chair, and one in September, concerning the strategy, but the process has been overhauled this year.