JLP says John Lewis/Waitrose split definitely not on the cards

Following news of its long-awaited return to profit this week, bosses at John Lewis Partnership have now said there are no plans to separate the department stores from its Waitrose supermarkets. It is also ruling out selling a stake in the business to raise funds.

There had been speculation the group could split its food and fashion/beauty/homewares operations amid fears that the struggling department stores chain could suffer further.

But Sharon White, who departs as chair next February, said: “I can be very clear, it’s not part of the plan.” She added that the business had a “self-funding” strategy focused on improved performance and cost reduction.

Last year, news also emerged White had been exploring the possibility of changing the retailer’s mutual structure in order to be able to sell a minority stake to raise £1 billion-£2 billion of new investment.

But executive director of finance Bérangère Michel, also said this week the business had “secured all the funding we needed to be able to accelerate our investments in growth. The partnership is in good financial health.”

The employee-owned group said it was now focused on getting the core retail business back on track following three consecutive years of losses.

But analysts think that it won’t be plain sailing for the John Lewis operation in particular.

Zoe Mills, Lead Retail Analyst at GlobalData, said: “While the John Lewis Partnership will be thankful for its return to profitability… the woes for its department store division are not over quite yet. 

“With inflation rates forecast to decelerate throughout 2024, John Lewis & Partners will hope it can entice lapsed shoppers back as they start to feel more financially secure. Nevertheless, John Lewis has arguably turned a corner on its profitability.

“We had become accustomed to John Lewis & Partners providing a wealth of information about the nuances of its department store business; however, the retailer has been more tight-lipped in recent months. Fashion sales including beauty were up year-on-year, but John Lewis & Partners saw weaker sales in its Home and Technology divisions. 

“FY2024/25 will see John Lewis Partnership return its focus to retail – though it will [also] continue to pursue its financial services and rental endeavours – and this is the right move for the group. However, while inflation rates will soften throughout 2024, volumes are expected to be flat or negative, highlighting that John Lewis must focus on price alongside services to entice shoppers to spend and trade up from value and discount retailers.”