Keeping it simple was always the answer for John Lewis | Nils Pratley
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<p>Remedy for partnership’s post-Covid woes was the old-fashioned one of basic shopkeeping and cutting costs</p><p>It turns out, the remedy for the John Lewis partnership’s post-Covid woes of a few years ago did not lie in seeking outside capital or building 10,000 buy-to-rent flats. Rather, the solution was the old-fashioned one of cutting costs and concentrating on basic shopkeeping.</p><p>As it happens, the wild idea of seeking external investors was virtually de
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Keeping it simple was always the answer for John Lewis Nils Pratley Remedy for partnership’s post-Covid woes was the old-fashioned one of basic shopkeeping and cutting costs I t turns out, the remedy for the John Lewis partnership’s post-Covid woes of a few years ago did not lie in seeking outside capital or building 10,000 buy-to-rent flats. Rather, the solution was the old-fashioned one of cutting costs and concentrating on basic shopkeeping. As it happens, the wild idea of seeking external investors was virtually dead the moment it was loosely aired , such was the uproar among customers and staff about the threat to the 100%-employee owned model. But the home-building adventure did get going until it was ditched by the newish chair Jason Tarry a couple of weeks ago . He accepted, in effect, a point that should have been obvious at the outset: if the building assumptions relied on interest rates remaining at near-zero for years, the project would not survive contact with events. The plainer parts of the turnaround plan seem to be working. Profits of £134m for the past year , up 6%, are nobody’s idea of a triumph since they’re miles away from what was achieved in the old days, but they were enough for a 2% bonus for partners. It may be at the tokenistic end, but it is a signal of some level of confidence after three years of no extra rations. The important figure for the business as a whole was operating cashflow of £595m, up 63%. That will banish any lingering worries about the health of the balance sheet and provide enough financial freedom to keep the group on the virtuous path of investing in both the department stores and Waitrose . It has been made possible because, first, the department store portfolio was given a necessary prune (despite howls of protest from affected local shoppers) under the former boss Dame Sharon White, taking the estate down to just 34 John Lewises. And the second factor is firmly in “keep it simple” operational territory: basic stuff ...
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