Dame Sharon White has officially been the chairman of John Lewis and Waitrose for just a few weeks. But she has been wrestling with the vexing questions hanging over the retailer’s future for months already.
Since her surprise appointment in June, the former civil servant has made multiple visits to shops and warehouses while also seeking the counsel of high street veterans. White has been in search of answers to a £2.4bn mountain of debt, falling sales and an exodus of senior managers, which have combined to create the worst crisis in John Lewis’s history.
Now the new chairman must face the mutual’s staff. On Thursday, John Lewis’s 83,900 “partners”, who together own the businesses, will find out whether they will get a bonus or not this year2020欧洲杯足球即时比分. This is always one of the biggest moments in the company’s year. And it also represents the first big public decision for White. Which way will she go?
If the new chairman scraps the bonus for the first time since the Fifties, she risks delivering another blow to already battered morale. But it would also signal the seriousness of John Lewis’s predicament and White’s determination to get to grips with it.
2020欧洲杯足球即时比分Money is undoubtedly tight at the 156-year-old firm and options such as a backdated share scheme, payable once a turnaround is gaining momentum, may prove tempting.
In some ways, it is a political test. In this sense, White is on familiar ground. Although a retail novice, her decades in Whitehall as a pioneering black woman in the senior ranks of the Treasury mean that difficult conversations about money are nothing new.
2020欧洲杯足球即时比分White has already hinted at store closures and job cuts. However, she is not expected to reveal a radical strategy overhaul when she updates the City on the company’s finances this week. But privately she has been saying there are an array of options on the table, including rowing back on her predecessor Sir Charlie Mayfield’s bold plan to merge John Lewis and Waitrose.
She is understood to have sought out Lord Simon Wolfson, the highly regarded chief of Next, for advice. An area of focus this week is expected to be Waitrose’s ambitions to sell more online. White has already made a positive impression internally. The former head of Ofcom is the “smartest person in the room, highly capable and she’s going to bring fresh ideas”, says one insider.
White’s first big hire was Nina Bhatia, a former partner at McKinsey, who has been brought in spearhead strategy. Sources close to John Lewis say that it has concluded its work with Deloitte, which has been advising on how to merge John Lewis and Waitrose – Mayfield’s last big decision as chairman, which was unveiled four months before he left. Because of Bhatia’s links, McKinsey could step in to advise a future strategy.
It is understood that White is not bowled over by the merger plan. Sources close to the company claim she not was consulted on the proposal to the extent that Sir Charlie implied. Even if she sticks to the original proposal, there is little chance of her offloading one of the two businesses to focus solely on the other. A joined-up structure would be hugely difficult to detangle.
2020欧洲杯足球即时比分White is still looking for a trading director. Bringing in a couple of retail big-hitters might buy her the breathing space to make up her mind about what she wants to do next. The business lacks a deep enough bench to fill in the gaps left by the string of departures.
This includes the boss of Waitrose, Rob Collins, the shock exit of Paula Nickolds, who ran John Lewis and was made de facto second-in-command, plus 75 senior directors, who were sacked, to help keep a lid on costs. Some of the executives “got paid out really well”, a source close to the company said, but they are not allowed to talk about their departures at the mutual’s request.
Names touted to resurrect the department store chain, which is turning into a cash drain, are Vittorio Radice, the original architect of the turnaround at upmarket rival Selfridges, as well as Christos Angelides, the chief executive of Reiss, who could be tempted to jump ship if the fashion retailer eventually changes hands.
When White formally took over as chairman at the beginning of February, she told staff at a meeting held the Odney Club in Berkshire they should do more to push the environmental and ethical agenda, values that the group have long espoused and are becoming more relevant.
2020欧洲杯足球即时比分Privately, she has been contemplating whether the business could mirror the Co-op, another retailer with an unusual structure, which has managed to pull itself back from the brink.
2020欧洲杯足球即时比分The Co-op’s membership is open to everyone, including shoppers, who can part with £1 in return for having a say in the social causes the Co-op supports locally as well as getting 5pc back to spend when they buy Co-op products.
Such a shift could revitalise the waning sense of loyalty among John Lewis’s customers, and with it boost sales. One headhunter said White might think about trying to poach from Co-op’s top brass to help overhaul Waitrose’s structure.
2020欧洲杯足球即时比分“She’s got to reinvent the [partnership] model; that would get her off the discount drug,” said one retail adviser, referring to John Lewis’s famous “Never Knowingly Undersold” promise. The price pledge has become a millstone around John Lewis’s neck, forcing it to match what distressed rivals such as Debenhams and House of Fraser charge at a time of almost perpetual high street sales. The pledge is understood to help boost sales but at the expense of profits.
2020欧洲杯足球即时比分John Lewis is attempting to beef up its financial arm, pushing more of loans, foreign currency and pet and wedding insurance to its customers. Sources say White is impressed with Next’s financial offering, which accounted for £250m of its £4.2bn sales last year.
2020欧洲杯足球即时比分This is something the new chairman might choose to double down on as she seeks new sources of income. The mutual cannot raise cash because of its structure. It has to make enough money to pay the interest on £300m worth of debt that will not be paid of for between five and 15 years.
The company borrowed £125m from two banks last year – with one £75m loan due in November 2021 and the remaining £50m in December 2023. In July the firm said it has managed to slash its debt pile by almost £500m to £2.4bn, putting it on a firmer financial footing and it had access to £1.1bn of emergency cash. It has already repaid a £275m bond last year.
On top of this, the company must, of course, cover its day-to-day running costs. This includes a hefty business rates bill of almost £180m, an expense that has been a thorn in the side of the retailer for years. The national living wage is going up in April, too, which will affect some of its partners.
All of them will be watching White’s next moves intently.