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| John Lewis to close Waitrose stores as profits slump - business live | John Lewis to close Waitrose stores as profits slump - business live |
| (35 minutes later) | |
| Newsflash: The Waitrose store on Camden high street will become an Aldi. | |
| The discount chain has exchanged contracts to acquire the Camden store - one of the five being shut by John Lewis. It intends to reopen the site in Spring 2019. | |
| While Waitrose is firmly upmarket (although it does run a popular Essentials range too), Aldi has grown its market share strongly by focusing more on price. | |
| Graham Hetherington, Aldi regional managing director, says North London shoppers will appreciate the difference: | |
| “The Camden store is an opportunity to reach customers in a busy London borough, many of whom may not have experienced Aldi’s award-winning, quality products at unbeatable prices before. | |
| “We expect details of the agreement to be finalised in autumn and work will then begin to refit the store with a view to opening in spring next year.” | |
| Newsflash: The Co-op has swooped in to buy the four small Waitrose stores being axed today, saving them from closure. | |
| The Co-op has exchanged contracts to take over the Little Waitrose convenience stores in Manchester (on the approach to Piccadilly railway, and in the financial centre of Spinningfields). | |
| It will also take over the store on Colmore Row in Birmingham City Centre, and Portman Square in central London. | |
| Stuart Hookins, Co-op Director of Property Portfolio and Development, says: | |
| “We are pleased to have worked with Waitrose to agree the purchase of four of its convenience stores. Our acquisition and refit programme forms a fundamental part of our food strategy. | |
| Our aim is for stores to be at the heart of local life, creating stronger communities and offering great quality products conveniently, when and where our members and customers need them.” | |
| This should also avoid job losses. Waitrose Partners at those shops being acquired by the Co-op will transfer to the Co-op under TUPE (Transfer of Undertakings, Protection of Employment regulations). Waitrose has also promised to find opportunities for staff wh want to say with them. | |
| The slide in John Lewis’s profits this year highlights the wider crisis in British retail, says Richard Lim, chief executive of consultancy group Retail Economics, | The slide in John Lewis’s profits this year highlights the wider crisis in British retail, says Richard Lim, chief executive of consultancy group Retail Economics, |
| “Even the mighty John Lewis has not been able to escape intensifying pressures building on UK high streets. The impact of rising sourcing costs, higher operating costs and the turbulent consumer environment has flatlined profits. | “Even the mighty John Lewis has not been able to escape intensifying pressures building on UK high streets. The impact of rising sourcing costs, higher operating costs and the turbulent consumer environment has flatlined profits. |
| “There’s a growing sense of panic for the retail sector as the intergenerational shift in behavioural trends is fragmenting the market. The emergence of the sharing economy, mass personalisation at scale and the ‘me’ economy has put the emphasis on retailers to differentiate themselves from their competitors. But the pace of change is accelerating and the race is on to pivot business models in a move to become fit-for-purpose in today’s digital age.” | “There’s a growing sense of panic for the retail sector as the intergenerational shift in behavioural trends is fragmenting the market. The emergence of the sharing economy, mass personalisation at scale and the ‘me’ economy has put the emphasis on retailers to differentiate themselves from their competitors. But the pace of change is accelerating and the race is on to pivot business models in a move to become fit-for-purpose in today’s digital age.” |
| John Lewis’s profits are being eaten by Amazon, and Brexit uncertainty, says Bloomberg: | John Lewis’s profits are being eaten by Amazon, and Brexit uncertainty, says Bloomberg: |
| The operator of department stores and Waitrose supermarkets said it’s unable to give a precise annual profit forecast because of economic uncertainty, some of it linked to the pending departure from the European Union. With Brexit less than a year away, consumer confidence will suffer further in the second half, Chief Financial Officer Patrick Lewis said. | The operator of department stores and Waitrose supermarkets said it’s unable to give a precise annual profit forecast because of economic uncertainty, some of it linked to the pending departure from the European Union. With Brexit less than a year away, consumer confidence will suffer further in the second half, Chief Financial Officer Patrick Lewis said. |
| The announcement from John Lewis, at a strategy day Wednesday, continues a run of bad news from U.K. store chains. Brexit is squeezing their costs and prompting consumers to keep closer tabs on budgets, compounding the damage from the rise of online shopping. | The announcement from John Lewis, at a strategy day Wednesday, continues a run of bad news from U.K. store chains. Brexit is squeezing their costs and prompting consumers to keep closer tabs on budgets, compounding the damage from the rise of online shopping. |
| Amazon and Brexit could wipe out profit at British retailer John Lewis https://t.co/uxupL8nOCD pic.twitter.com/OyDyHEjXE0 | Amazon and Brexit could wipe out profit at British retailer John Lewis https://t.co/uxupL8nOCD pic.twitter.com/OyDyHEjXE0 |
| Newsflash: The Bank of England has issued a warning that Europe needs to do more to prepare for Brexit. | Newsflash: The Bank of England has issued a warning that Europe needs to do more to prepare for Brexit. |
| In its new financial stability report, the BoE says that progress has been made in protecting UK households and businesses against Brexit disruption but “material risks remain”. | In its new financial stability report, the BoE says that progress has been made in protecting UK households and businesses against Brexit disruption but “material risks remain”. |
| It is particularly concerned that the EU hasn’t created a temporary permission regime to allow financial firms to continue trading across Europe after next March. | It is particularly concerned that the EU hasn’t created a temporary permission regime to allow financial firms to continue trading across Europe after next March. |
| Without such a regime, trillions of pound worth of derivative contracts are at risk, plus millions of insurance contracts. | Without such a regime, trillions of pound worth of derivative contracts are at risk, plus millions of insurance contracts. |
| The Bank says: | The Bank says: |
| Progress has been made, but material risks remain. | Progress has been made, but material risks remain. |
| The biggest remaining risks of disruption are where action is needed by both UK and EU authorities, such as ensuring the continuity of existing derivatives contracts. | The biggest remaining risks of disruption are where action is needed by both UK and EU authorities, such as ensuring the continuity of existing derivatives contracts. |
| “As yet the EU has not indicated a solution analogous to a temporary permissions regime.” | “As yet the EU has not indicated a solution analogous to a temporary permissions regime.” |
| BoE governor Mark Carney is speaking to reporters in London now, warning that the rise of protectionism could hurt the global economy. We’ll have more details shortly... | BoE governor Mark Carney is speaking to reporters in London now, warning that the rise of protectionism could hurt the global economy. We’ll have more details shortly... |
| Here are the five Waitrose stores that are closing as part of the strategy announced this morning: | Here are the five Waitrose stores that are closing as part of the strategy announced this morning: |
| Spinningfields, Manchester | Spinningfields, Manchester |
| Manchester Piccadilly | Manchester Piccadilly |
| Colmore Row, Birmingham | Colmore Row, Birmingham |
| Portman Square, London | Portman Square, London |
| Camden, London | Camden, London |
| The first four are convenience stores, while the Camden store is a small supermarket. | The first four are convenience stores, while the Camden store is a small supermarket. |
| John Lewis’s chairman has now weighed in on Brexit, saying it is ‘unthinkable’ that Britain leaves the EU without a deal. | John Lewis’s chairman has now weighed in on Brexit, saying it is ‘unthinkable’ that Britain leaves the EU without a deal. |
| He made the comments at this morning’s media briefing, as he outlines the company’s plans to shut five Waitrose stores and boost investment. | He made the comments at this morning’s media briefing, as he outlines the company’s plans to shut five Waitrose stores and boost investment. |
| Reuters has the details: | Reuters has the details: |
| Britain is unprepared to leave the European Union without a deal and chaos would ensue were it to happen, the chairman of department store group John Lewis said on Wednesday. | Britain is unprepared to leave the European Union without a deal and chaos would ensue were it to happen, the chairman of department store group John Lewis said on Wednesday. |
| “A no deal Brexit is in my view a pretty much unthinkable scenario,” Charlie Mayfield told reporters. | “A no deal Brexit is in my view a pretty much unthinkable scenario,” Charlie Mayfield told reporters. |
| Martin Lane, managing editor of money.co.uk, is alarmed that profits across John Lewis’s business have all but evaporated so far this year. | Martin Lane, managing editor of money.co.uk, is alarmed that profits across John Lewis’s business have all but evaporated so far this year. |
| He says: | He says: |
| “It’s no surprise John Lewis have seen a fall in consumer demand, but to make close to no profit is worrying to say the least. John Lewis are struggling to soak up rising costs whilst improving their own infrastructure. The strategic move to close a few Waitrose stores is part of a wider plan to innovate rather than expand. | “It’s no surprise John Lewis have seen a fall in consumer demand, but to make close to no profit is worrying to say the least. John Lewis are struggling to soak up rising costs whilst improving their own infrastructure. The strategic move to close a few Waitrose stores is part of a wider plan to innovate rather than expand. |
| “With numerous high street retailers going into administration since Christmas, this news will surely have the John Lewis board members in crisis talks. | “With numerous high street retailers going into administration since Christmas, this news will surely have the John Lewis board members in crisis talks. |
| Lane believes that Waitrose are losing out to cheaper rivals, as consumers cut back. | Lane believes that Waitrose are losing out to cheaper rivals, as consumers cut back. |
| John Lewis’s department stores face an even bigger nemesis - the internet. | John Lewis’s department stores face an even bigger nemesis - the internet. |
| With lack of wage growth and rising living costs it’s become evident that shoppers are tightening their purse strings and saving where they can. Cheaper supermarkets like Aldi and Lidl are growing in popularity which leaves Waitrose out in the cold. John Lewis on the other hand are battling an even bigger battle - the online retail market. With the recent news House of Fraser are having to shut a large number of their stores, the worry is that John Lewis may end the same way. The partnership has its work cut out to recover from this. | With lack of wage growth and rising living costs it’s become evident that shoppers are tightening their purse strings and saving where they can. Cheaper supermarkets like Aldi and Lidl are growing in popularity which leaves Waitrose out in the cold. John Lewis on the other hand are battling an even bigger battle - the online retail market. With the recent news House of Fraser are having to shut a large number of their stores, the worry is that John Lewis may end the same way. The partnership has its work cut out to recover from this. |
| The boss of John Lewis Partnership, Paula Nickolds, is briefing reporters about the challenging retail world: | The boss of John Lewis Partnership, Paula Nickolds, is briefing reporters about the challenging retail world: |
| John Lewis managing director Paula Nickolds says of high street: 'moderate is dead, good is no longer good enough' | John Lewis managing director Paula Nickolds says of high street: 'moderate is dead, good is no longer good enough' |
| Waitrose chief Rob Collins is also there: | Waitrose chief Rob Collins is also there: |
| Waitrose boss Rob Collins says he expects online sakes to double over next five years | Waitrose boss Rob Collins says he expects online sakes to double over next five years |
| Rob Collins of Waitrose says the grocer is "all about delicious health". | Rob Collins of Waitrose says the grocer is "all about delicious health". |
| The company is also rebranding, to emphasise the partnership element of its business: | The company is also rebranding, to emphasise the partnership element of its business: |
| John Lewis and waitrose to be rebranded as follows...to demonstrate the contribution of its partners. pic.twitter.com/bPjGWhSEku | John Lewis and waitrose to be rebranded as follows...to demonstrate the contribution of its partners. pic.twitter.com/bPjGWhSEku |
| Big branding change coming at John Lewis - will be John Lewis & Partners and Waitrose & Partners from Sept | Big branding change coming at John Lewis - will be John Lewis & Partners and Waitrose & Partners from Sept |
| The John Lewis Partnership has now issued a statement, confirming that profits are taking a tumble this year and that several Waitrose stores are being shuttered. | The John Lewis Partnership has now issued a statement, confirming that profits are taking a tumble this year and that several Waitrose stores are being shuttered. |
| The news comes in a strategic update, outlining its plans for its department stores and supermarkets. This includes £500m of fresh investment over the next few years. | The news comes in a strategic update, outlining its plans for its department stores and supermarkets. This includes £500m of fresh investment over the next few years. |
| Here are some highlights (I’ve bolded up the key points): | Here are some highlights (I’ve bolded up the key points): |
| It is widely acknowledged that the retail sector is going through a period of generational change and every retailer’s response will be different. For the Partnership, the focus is on greater differentiation – not scale. We have clear plans to build on our strengths and to sharpen our points of difference in both Waitrose and John Lewis. | It is widely acknowledged that the retail sector is going through a period of generational change and every retailer’s response will be different. For the Partnership, the focus is on greater differentiation – not scale. We have clear plans to build on our strengths and to sharpen our points of difference in both Waitrose and John Lewis. |
| These plans include further investment in and development of unique products and service, together with a greater emphasis on own brand and innovation. | These plans include further investment in and development of unique products and service, together with a greater emphasis on own brand and innovation. |
| On current earnings: | On current earnings: |
| We expect the Partnership’s half year profits before exceptional items – which are always much lower and more volatile than the second half – to be close to zero this year. For the full year there are a wide range of possible outcomes, given the market uncertainty, but we are currently assuming that profits before exceptional items will be substantially lower than last year. | We expect the Partnership’s half year profits before exceptional items – which are always much lower and more volatile than the second half – to be close to zero this year. For the full year there are a wide range of possible outcomes, given the market uncertainty, but we are currently assuming that profits before exceptional items will be substantially lower than last year. |
| The Partnership currently expects to see profit growth in Waitrose, a decline in John Lewis and significant extra costs at the Partnership level as a result of greater IT investment, which will be a big driver behind the overall profit change. | The Partnership currently expects to see profit growth in Waitrose, a decline in John Lewis and significant extra costs at the Partnership level as a result of greater IT investment, which will be a big driver behind the overall profit change. |
| Today the Partnership has announced that it will take steps to strengthen its balance sheet by a further £500m over three years to invest in product and service innovation. This will be achieved by rebuilding profitability at Waitrose, creating more value from the property estate, and conducting a review of the Partnership’s pension scheme. | Today the Partnership has announced that it will take steps to strengthen its balance sheet by a further £500m over three years to invest in product and service innovation. This will be achieved by rebuilding profitability at Waitrose, creating more value from the property estate, and conducting a review of the Partnership’s pension scheme. |
| And here’s confirmation that five Waitrose stores will close: | And here’s confirmation that five Waitrose stores will close: |
| Unlike many of its competitors, the John Lewis Partnership has a well balanced and well located store portfolio, with 353 Waitrose shops and 50 John Lewis. As we develop our plans to prioritise differentiation we will continue to make adjustments to our overall estate, including exit or closures, but at a rate that’s in line with what we have seen over the last few years. To this end, Waitrose today announced the disposal of four convenience shops and one small supermarket. | Unlike many of its competitors, the John Lewis Partnership has a well balanced and well located store portfolio, with 353 Waitrose shops and 50 John Lewis. As we develop our plans to prioritise differentiation we will continue to make adjustments to our overall estate, including exit or closures, but at a rate that’s in line with what we have seen over the last few years. To this end, Waitrose today announced the disposal of four convenience shops and one small supermarket. |