John Lewis set to permanently close some stores once coronavirus lockdown ends

John Lewis

John Lewis bosses are deciding which of their 50 stores will re-open after the coronavirus lockdown eases, with inside sources claiming it is ‘highly unlikely’ all of them will survive.

The High Street giant was forced to close all 35 of its department stores and 15 smaller John Lewis At Home shops when Britain went into lockdown in March.

It saw 400 staff made redundant and another 14,000 furloughed.

But today it was revealed retail bosses have begun considering which stores are not financially viable – even when social distancing measures ease up.

John Lewis has battled rising rent and business rates, announcing ‘dire’ results in January, with sales 23 per cent down on the previous year.

Other High Street chains have already gone bust amid the pandemic, including Debenhams, Laura Ashley and Carluccio’s.

New boss Dame Sharon White, who joined as chairman from Ofcom in Feburary, said it could take five years to return John Lewis to its former glory.

Dame Sharon and her team are set to face analysts in the City tomorrow, updating them on the John Lewis Partnership’s performance over the past week.

There has also been speculation that Dame Sharon will need to tap up customers and financial institutions, through a corporate bond, for extra cash.

The Times reported on Monday that she is seeking out views to see if investors are willing. A previous bond was launched in 2011 with a 4.5 per cent interest rate and 2 per cent in store vouchers.

The John Lewis Partnership also includes Waitrose, which has fared better during the lockdown and has been allowed to stay open for shoppers to stock up on essentials.

But with a major ramp-up of online operations, discussions are under way on whether it will be financially viable to reopen John Lewis department stores.

Several Waitrose stores have already been forced to close in recent years.

JLP said in a statement today: ‘We keep our estate under continuous review in order to ensure we have the right amounts of shops to best serve our customers and remain commercially viable.

‘It is too early to make a decision but, as always, any decision that is made is done with securing the long-term financial sustainability of the Partnership and is always communicated to our Partners first.’

Earlier this year, JLP decided to hand almost £1million to its former managing director Paula Nickolds, despite staff job losses and sales tumbling by a third.

John Lewis paid out £939,773 to Paula Nickolds, who was ousted from the department store business in January.

The group also confirmed an £892,362 pay packet given to Rob Collins, who had been managing director of the group’s Waitrose supermarket arm until he stepped down in October when the group’s restructuring was announced.

Shortly after she replaced Ms Nickolds in February, Dame Sharon warned the company faced the most challenging period in its history.

She added that stores are unlikely to remain open without financial improvements.

Her statement said at the time: ‘We need to reverse our profit decline and return to growth so that we can invest more in our customers and in our partners.

‘This will require a transformation in how we operate as a partnership.

‘These are the most challenging but exciting times in retail for a generation.’

The Mail On Sunday revealed over the weekend that John Lewis bosses have already started drawing up their blueprint for its reopening.

Andrew Murphy, John Lewis Partnership’s executive director of operations who has led the crisis strategy, said the chain could begin reopening some stores as soon as the middle of next month.

But it now looks unlikely that the chain will emerge from the crisis without cutting a number of stores and workers’ jobs.

For those stores that do re-open, larger ones such as London, Birmingham or Glasgow would be likely to remain closed until the later phases of the revival plan.

Murphy said details of their strategy were likely to change before the launch and no date had been set.

He said: ‘For the last four or five weeks the crisis has been intense and the demands have meant we’ve been dealing with circumstances changing almost daily.

Over the past seven to ten days there has been a shift. For the first time we have been properly beginning to think about a restart.’

Veteran retail analyst, Richard Hyman, commented today: ‘Does it make sense for John Lewis to close some stores, absolutely yes.

‘No one wants to see people losing their jobs which is what would happen, but the reality is for the market at large, online has been getting bigger and bigger, with John Lewis at the vanguard.’

He pointed out that 30 per cent of all retail is already online, adding ‘for John Lewis that number was short of 50 per cent before COVID-19, although now it’s at 100 per cent.

‘The reality is the retail world we are all moving into means every retailer needs fewer stores than it did before, including John Lewis, and not addressing this problem puts the rest of the business in jeopardy.’