John Lewis ‘risks becoming another Debenhams’ if it scraps prized staff-ownership model, campaigners warn
John Lewis risks becoming “another Debenhams or Sports Direct” if it scraps its prized staff-owned model, campaigners fear.
The 158-year-old retailer is currently owned by its 74,000 employees, which means it is run for their benefit.
But chairwoman Dame Sharon White is considering a plan to sell a minority stake in the group, which also owns Waitrose. She wants to raise up to £2bn to invest in the struggling business to return it to a sustainable footing.
It’s dealing with a slowdown on the high street as shoppers increasingly move online, and it’s been hemorrhaging cash due to the pandemic and spiraling cost of living.
But the move, which would attract outside investors for the first time in more than 70 years, would be a dramatic game changer for John Lewis. It would require a change in the company’s constitution to dilute their mutual status.
John Lewis risks becoming “another Debenhams or Sports Direct” if he scraps his prized staff-owned model, campaigners fear (file image)
John Lewis opened his first store on London’s Oxford Street in 1864. He now has 34 department stores across the country and 332 Waitrose supermarkets.
The firm’s partnership structure has been hailed as the ideal employer, with then-Deputy Prime Minister Nick Clegg saying in 2012 that it should be the model for the entire economy.
And in January, White, who has been in charge since 2020, said the business is geared toward “making the world a happier place” rather than maximizing profit. She said that the values remain an integral part of the group.
John Lewis needs up to £2bn to invest in technology and data analytics, as well as the Waitrose supply chain, the Sunday Times reported.
He is unable to raise money from staff and is limited in how much he can borrow because he is currently £1.7bn in debt.
Peter Hunt of mutual lobbying group Mutuo said a change to their partnership model would “just make it another Debenhams, or Sports Direct or something.” He added: “At the end of the day, ownership of their employees makes them different and that’s why people like them.”
Hunt warned that John Lewis raising up to £2bn would mean almost half of the business could end up being owned by an outside investor.
Labor MP Gareth Thomas, chairman of the parliamentary group for mutuals, said the plans were “extremely worrying”.
Peter Hunt of mutual lobbying group Mutuo said a change to their partnership model would “just make it another Debenhams, or Sports Direct or something.” Pictured: Archive image of Worthing Debenhams store
He said: ‘If John Lewis were to lose their mutual status it would be devastating to staff and families across the country who have cherished the business for decades.
“The ownership of the staff makes John Lewis special, and it would be a sad situation if that changed.”
Thomas and Hunt said the change wouldn’t be necessary if it was possible for the company to raise money without employees losing control.
Thomas said: ‘Ministers could prevent this with new laws allowing companies like John Lewis to raise money without having to give up their mutual status.
“If there was the political will, this could be resolved and the mutual status of John Lewis could be saved.”
John Lewis insisted that the plans were not about removing their mutual status. But a spokesperson said: ‘We have always said that we would seek partnerships to help finance our transformation and exciting growth plans.
“Our partners, who are the owners of the business, will be the first to find out about any news.”