Former John Lewis boss warns against ownership ‘tragedy’
A former John Lewis boss has warned that it would be a “tragedy” if the retailer watered down its staff ownership model which has been in place for more than 70 years.
Andy Street, the mayor of the West Midlands, who served as John Lewis' managing director from 2007 to 2016, criticised plans being considered by the partnership’s senior leadership that could result in a stake being sold to an outside investor.
Mr Street said: “It would be a tragedy if that occurred because I think John Lewis goes a bit beyond a shop.
“You can buy the same television in other places in truth, but John Lewis was about a way of doing business, showing the market there was a better way almost and that's potentially under threat.”
It comes after former Downing Street adviser Mary Portas said John Lewis had “let go of its soul” under boss Sharon White in an open letter posted on LinkedIn.
Addressing the John Lewis chairman and incoming chief executive Nish Kankiwala, Ms Portas said their challenge was “not purely financial” as they were tasked with saving “part of our collective cultural identity”.
Under the current model, which has been in place since 1950, John Lewis’s 74,000 employees share the running and profits of the business, making it the biggest employee-owned company in Britain.
The retailer’s constitution was first drawn up by John Spedan Lewis in 1928 and pledges to work towards “a happier world” under the complete ownership of its employees.
However, Dame Sharon is considering selling a chunk of the debt-laden firm that would allow it to raise between £1bn and £2bn to reinvest in the business.
Dame Sharon has been battling to revive the fortune’s of the retailer since taking over in 2020, amid dwindling sales and large losses. Earlier this month, the mutual, which also owns Waitrose, told staff that they would not receive a bonus after posting a worse-than-expected £230m annual loss. The firm also has £1.7bn of debt on its books.
Speaking on the BBC's Sunday with Laura Kuenssberg programme, Mr Street urged the retailer's leadership to think about what was at the heart of the business and “hold onto that”.
Acknowledging its recent struggle, he added: “You have to address the underlying point. This was ever the case in the John Lewis model over 150 years, if you can't go to the equity markets you have to trade your way through it.
“Some of the best retailers at the moment – Next, Primark, Selfridges – are proving physical retail can still do that, and that's really the challenge to John Lewis and Waitrose.”
Mr Street joined John Lewis in 1985 as a graduate trainee.
A spokesman for John Lewis said the partnership model “will always be the heart of our business”, adding: “It has helped us build the strong and well-capitalised business that we have today. We keep under review our future funding needs so we have options to fuel the next stage of our growth plan, but nothing is happening in the short term.”