John Lewis ‘risks turning into another Debenhams’ if it scraps cherished staff ownership model, campaigners warn
John Lewis risks becoming ‘just another Debenhams or Sports Direct’ if it scraps its cherished staff ownership model, campaigners fear.
The 158-year-old retailer is currently owned by its 74,000 employees – meaning it is run for their benefit.
But chairman Dame Sharon White is considering a plan to sell a minority stake in the group, which also owns Waitrose. She wants to raise as much as £2billion to invest in the struggling business to return it to a sustainable footing.
It is grappling with a slowdown on the high street – as shoppers increasingly move online – and has been haemorrhaging cash due to the pandemic and the spiralling cost of living.
But the move – which would bring in outside investors for the first time in more than 70 years – would be a dramatic shift for John Lewis. It would require a change to the firm’s constitution to water down its mutual status.
John Lewis risks becoming ‘just another Debenhams or Sports Direct’ if it scraps its cherished staff ownership model, campaigners fear (file image)
John Lewis opened its first store on London’s Oxford Street in 1864. It now has 34 department stores around the country and 332 Waitrose supermarkets.
The firm’s partnership structure has seen it hailed as the ideal employer, with then-deputy prime minister Nick Clegg saying in 2012 it should be the model for the whole economy.
And in January White, who has been in charge since 2020, said the business is geared toward ‘making the world a happier place’ as opposed to maximising profits. She said values remain an integral part of the group.
John Lewis needs up to £2 billion to invest in technology and data analysis as well as in the Waitrose supply chain, the Sunday Times reported.
It cannot raise money from staff and is constrained in how much it can borrow because it currently has £1.7billion of debt.
Peter Hunt of mutual lobby group Mutuo said a change to its partnership model would ‘just turn it into another Debenhams, or Sports Direct or something like that’. He added: ‘At the end of the day their employee ownership makes them different and that is why people like them’
Hunt warned that John Lewis raising as much as £2billion would mean nearly half the business could end up being owned by an outside investor.
Labour MP Gareth Thomas, chairman of Parliament’s all party group for mutuals, said the plans were ‘extremely worrying’.
Peter Hunt of mutual lobby group Mutuo said a change to its partnership model would ‘just turn it into another Debenhams, or Sports Direct or something like that’. Pictured: File image of Worthing Debenhams store
He said: ‘If John Lewis lost its mutual status it would be devastating for staff as well as families around the country who have cherished the business for decades.
‘Staff ownership makes John Lewis special, and it would be a sad state of affairs if that changed.’
Thomas and Hunt said the change would not be necessary if it was possible for the business to raise money without employees losing control.
Thomas said :’Ministers could prevent this with new laws to allow firms like John Lewis to raise money without having to give up their mutual status.
‘If the political will was there, this could be sorted out and John Lewis’s mutual status could be saved.’
John Lewis insisted the plans were not about scrapping its mutual status. But a spokesman said: ‘We have always said we would seek partnerships to help fund our transformation and exciting growth plans.
‘Our Partners, who own the business, will be the first to hear about any developments.’