The new chairman of John Lewis has refused to rule out the permanent closure of some department stores when the government’s high street lockdown ends.
Sharon White, who took over in February and immediately warned of potential store closures and job cuts at the group which also owns Waitrose, said she could not confirm any plans until it was clear when department stores would be allowed to reopen under the government’s effort to control the spread of coronavirus and that “no decisions had been taken” on specific stores. The department stores were battling to return to profitability even before the outbreak.
“It is not clear enough at the moment,” White said. “We are doing financial modelling looking at when lockdown is going to end and looking at what life outside lockdown will be like. We will have to look at the financial position for us when we get more certainty over the second half [of the financial year to the end of January] before taking those decisions [on jobs and stores].”
She said it could take up to six weeks from when the government announces the lifting of restrictions to prepare department stores for reopening, because they would need cleaning, displays would have to be reorganised, protective equipment would have to be installed and staff trained to work in the new environment.
That delay could give time for completion of a strategic review of the business, which has already been brought forward by several months to this summer.
The decision on the future of department stores will be partly influenced by the review but also by how long John Lewis is forced to keep stores closed.
There are fears that department stores may be asked to remain shut until the end of the summer or even into the autumn, as the last non-essential stores allowed to reopen. That would put further pressure on the already stressed sector which has seen House of Fraser and Debenhams fall into administration and permanently close dozens of outlets between them.
White said that the “pattern of trading” at John Lewis had not changed since a recent business update that revealed sales at the department store group had fallen by 17% year on year since mid March despite an 84% surge in online trade.
Sales at Waitrose have risen 8% partly thanks to demand for home deliveries as well as the closures of restaurants and cafes, which has forced more people to cook at home.
White expects the shift to online shopping seen at both John Lewis and Waitrose in recent weeks to be sustained even after lockdown ends.
“Online is going to be a bigger deal. When we look at Asia and Europe, even without social distancing, people are not flocking back to stores. They are worried about being with other people.”
She said the company was also considering ways to offer more services, expanding its brands beyond stores, potentially including a tie-up with a strategic partner.
The group has moved into new markets in the past by partnering with another business, such as its investment in the then tiny start-up Ocado to help develop grocery home shopping. White said the group was now looking at how it might increase its presence in areas such as consumer finance or home maintenance, or add new services, again with a partner.
But White said John Lewis was also looking at ways to capitalise on signs of a shift to more sustainable shopping. Haberdashery sales, for instance, have jumped as shoppers enjoyed mending clothes and crafting while they had more time at home. “We are definitely looking at opportunities in the way shopping habits have changed,” she said.
