Yahoo Finance Coronavirus: John Lewis and Waitrose furlough 14,000 staff
John Lewis and Waitrose have furloughed 14,000 staff as part of efforts to cut costs during the COVID-19 pandemic.
John Lewis Partnership, which owns the department store and supermarket Waitrose, said on Tuesday 21 April it was taking actions to preserve cash in the business to help the partnership weather the storm.
The group said 14,000 staff had been furloughed under the government’s job retention scheme, largely due to the closure of all 50 John Lewis department stores.
John Lewis Partnership has also cut marketing spend by £100m ($124m), cut investment plans, and is buying less stock. The group is also trying to negotiate rent reductions, while the board and management have agreed to take 20% pay cuts for three months.
“The Partnership has been trading for nearly a century,” chairman Sharon White wrote in a letter to staff. “It has survived a world war and bombings, economic crashes and crises. Thanks to you, we shall also come through COVID-19 too and emerge stronger.”
White said all frontline John Lewis and Waitrose staff will receive a one-off bonus of £200 in recognition of their hard work during the crisis. All furloughed staff will also receive full pay until the end of May, when they will move onto the government’s 80% pay scheme.
The cost cutting comes after a significant deterioration in trading at John Lewis. The closure of stores has pushed some sales online but customers are buying cheaper items.
“We are buying more Scrabble but fewer sofas,” White wrote.
John Lewis sales have fallen by 7% since the end of last January and the slump has accelerated to a 17% decline since mid-March.
Waitrose has seen an uptick in demand. Sales have rise by 8% since the end of January, with booming demand for items like rice, pasta, long life milk, home baking goods, frozen foods and cleaning products.
However, Waitrose is a smaller part of the business. White also warned that sales at both divisions could ultimately fall this year.
“Over the course of the full year, this worst case would result in a sales decline of around 35% in John Lewis, around double the current level, while at Waitrose it would result in a more modest decline of less than 5%,” she wrote.
Read more: 140,000 firms have applied for UK government furlough scheme
White said Waitrose had around £900m of cash in the business and £500m of undrawn bank facilities. She said she was “confident that we have sufficient cash to operate successfully through a broad range of potential scenarios.”
John Lewis Partnership said it was “supporting the community” the crisis with actions such as essential supply boxes for NHS workers, a £1m fund to support the vulnerable, and priority access to Waitrose for NHS staff.
The group pledged to keep paying suppliers within a turnover of below £100,000 within seven days and said it would donate £200,000 from the Waitrose charitable foundation to support overseas farmers.
Earlier this year, John Lewis Partnership cut staff bonuses to the lowest level in 60 years after profits slumped by 23% in 2019.
Watch the latest videos from Yahoo UK
