John Lewis Partnership’s outgoing chairman Charlie Mayfield has insisted that the business is pursuing the right strategy despite poor Christmas sales results and the threat once again that it could fail to pay a bonus to its partners (employees) for the first time since 1953.
Alongside the trading update covering the seven weeks to 4 January, the company made the shock announcement that Paula Nickolds, managing director of John Lewis & Partners who was due to take up the new position of executive director of brand at JLP, will leave in February when Sharon White takes over as chairman and its new structure, dubbed the "future partnership", comes into effect.
Speaking on a call to journalists, Mayfield said Nickolds’ exit had been a joint decision and refused to be drawn on who had initiated it. Nickolds has been at the business for 25 years and managing director since 2017. Her counterpart at Waitrose & Partners, Rob Collins, had already announced that he would leave when his current role ceased to exist.
Sales at John Lewis fell 2.3% to £1.13bn over the Christmas period, with a like-for-like fall of 2%. At Waitrose, they were down 1.3% to £1.03bn, but up 0.4% like for like. Waitrose online sales grew by 16.7% and in the week before Christmas were up almost a quarter (23.4%).
In a statement, JLP acknowledged that it may opt not to pay a bonus to partners this year, although the decision will be taken by White and the new board in March. Last year’s bonus of 3% was the lowest since 1953, the last time no bonus was paid.
Mayfield admitted that John Lewis' "Never knowingly undersold" positioning had an impact on income when many retailers are running big price promotions, but he pointed to the wide divide in the performance of different categories at John Lewis, with beauty sales up 5% and fashion outperforming the market.
Asked if he had any regrets about the plans to combine certain functions of John Lewis and Waitrose given the departures of Collins and Nickolds, Mayfield said: "Not at all – the partnership is absolutely behind these changes.
"This was not hatched in secret – it was developed by the whole team, including Rob and Paula. It’s very easy to overlook some of the care that’s gone into its design; we’re not just mashing together the two brands in an unthought-through way."
The intention of the change was "drawing on the synergy we can get in areas like hospitality", Mayfield said, explaining that it would benefit John Lewis because of the much higher frequency with which customers shop for food than non-food items.
He said the awareness of certain services was "way lower than we’d like it to be" – for example, more than 40% of customers are unaware that they can click and collect John Lewis orders in Waitrose. The latest results, Mayfield said, "will simply underline the importance and opportunity" of the changes.
JLP confirmed that Craig Inglis and Martin George, currently the customer directors at John Lewis and Waitrose respectively, were staying on as director of customer and director of marketing respectively, as sources told Campaign in October 2019.