Struggling John Lewis could axe famous ‘Never Knowingly Undersold’ price pledge after nearly a century as slump in profits starts to bite
- Boss Dame Sharon White said it could take 5 years to return John Lewis to glory
- Experts said the employee-owned company was fighting for survival
- Group profits plunged to £146 million, down from £452 million three years ago
John Lewis’s 95-year-old ‘Never Knowingly Undersold’ pledge is facing the axe amid plunging profits.
Bosses announced ‘dire’ results yesterday, dragging one of Britain’s best-loved names into the high street crisis.
They told 80,000 staff that their much-coveted bonus had been cut to about £370 each – the lowest level since 1953.
And stores were put on notice of closure, just as John Lewis braces for a fall in shopper numbers due to coronavirus.
Experts said the employee-owned company was fighting for survival, and that its fall from grace had been ‘spectacular’.
New boss Dame Sharon White, who joined from regulator Ofcom last month, said it could take five years to return John Lewis to its former glory.
New boss Dame Sharon White, pictured, who joined from regulator Ofcom last month, said it could take five years to return John Lewis to its former glory
A graphic shows Dame Sharon White with the decreasing profits of John Lewis since 2017
She said: ‘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.’
Group profits plunged to £146 million, down from £452 million three years ago.
The department stores posted a £37 million loss in the year to January 31, compared to £93million profit the year before. Waitrose posted profits of £212 million. The 156-year-old department store’s price promise has been in place since 1925.
It states that customers who found lower prices elsewhere on the high street would receive a refund for the difference. It is rigorously enforced by John Lewis, which checks its bricks-and-mortar competitors regularly for sales and promotions.
The department store posted a £37 million loss in the year to January 31, compared to £93million profit the year before. Waitrose posted profits of £212 million
But heavy discounting at rivals such as Debenhams and House of Fraser, and the rise of Amazon, has led many to suggest it is out of date. John Lewis will close three branches of grocery arm Waitrose – in Helensburgh, Dunbartonshire; Four Oaks, Sutton Coldfield; and Waterlooville, Hampshire – this year, in addition to the seven it closed last year. The 400 employees affected who wish to stay with the group will be ‘actively supported’ to do so.
Dame Sharon said John Lewis’s 50 department stores were under review. Some will be closed or down-sized, while others could be integrated with Waitrose outlets.
Retail expert Andrew Busby said: ‘This is the biggest threat to the business John Lewis have had in their history. ‘John Lewis hasn’t got time – Dame Sharon White does not appear to understand that they may not even have a business in three to five years. Never Knowingly Undersold has become a millstone around their neck because of greater competition.
‘We have so much choice now, it’s just not relevant.’
Julie Palmer, partner at consultancy Begbies Traynor, said: ‘John Lewis’s fall from grace has been spectacular. Once the envy of the retail industry, the company has suffered dismal trading performances over the past few years. This goes to show that no retailer is safe.’