Jason Tarry, who took over as chair of the John Lewis Partnership last September, is leading a significant revival effort for the struggling department store. The employee-owned business recently reported a tripling of its profits to £126 million after three consecutive years of losses. However, Tarry acknowledges that substantial 'catch up investment' is still required across its store estates, supply chains, technology, and overall efficiency. The company remains on track to meet its ambitious target of £400 million in profit by 2026.
John Lewis is looking to emulate the success of rival Marks & Spencer, which has undergone a successful transformation. While John Lewis's £12.8 billion in sales is close to M&S's £13 billion, it lags significantly in pre-tax profits, with M&S reporting £672 million. To address this, John Lewis invested £150 million last year in store upgrades, including new headsets for staff, improved customer experience, and major refurbishments of beauty halls. Modernized beauty halls in Cheadle and High Wycombe have shown promising results, with sales growth in High Wycombe rocketing from 3% to 25%. Further beauty hall upgrades are planned for Bluewater, Liverpool, and Solihull, alongside improvements in fashion, home, and tech departments.
The department store is also bolstering its fashion offerings, adding over 200 third-party brands last year and another 49 for the upcoming spring/summer season. Fashion sales exceeded £1 billion last year, with menswear and kids' wear performing strongly. The reinstatement of the 'Never Knowingly Undersold' (NKU) price pledge in September proved to be a catalyst for a second-half turnaround, generating an estimated £112 million in incremental revenue through higher volume and increased traffic. This included an additional 100,000 unpaid web visits per week through SEO and direct traffic.
Despite the positive trading update, John Lewis will not be issuing partner bonuses for the fourth time in five years. Instead, the company is prioritizing closing the gap on base pay, reflecting employee preferences for consistent monthly support rather than an annual bonus. John Lewis is investing an additional £114 million this year to raise hourly rates for store employees to £12.40 outside London and £13.85 within the M25, with specialist roles earning £13.39 and £14.96 in London, respectively. This brings the total investment in staff pay increases over the last couple of years to £230 million. While trading conditions remain tough, with Tarry noting lower sales and higher costs than anticipated, the leadership team is confident in the current strategy to drive growth and intensify its rivalry with M&S.
