Store head rules out job cuts to beat crunch

Aug 28 2008 by Peter McCusker, The Journal

THE chairman of the John Lewis Partnership has ruled out job cuts at the group this year to weather the current squeeze on the high street.

John Lewis, which owns the department store chain and supermarket Waitrose, is owned by its 69,000 staff or partners.

Last week it emerged that bitter rival Marks & Spencer is slashing its redundancy terms for staff, which unions fear is a precursor to possible job losses.

But John Lewis chairman Charlie Mayfield said: “There will be no job cuts. We are a business, we believe in pursuing a long-term approach to growing the business – we’re not into making knee-jerk cuts in staff costs just to protect short-term profit.”

Mr Mayfield highlighted the differences between the partnership and other listed companies which are accountable to its shareholders.

“Our ownership structure is key here, because we’re owned by our partners (employees), they want us to take a long-term not a short-term approach. Our structure means that at these times we might take a different approach to some other businesses.” In March, staff shared a record bonus pot of £181m – with payouts equivalent to more than 10 weeks’ salary – after the partnership posted profits of £379.8m in the year to January 26.

But John Lewis, which has a branch in Newcastle and Waitrose outlets in Hexham and Eldon Square, has fared less well in more challenging retail conditions since then, with the company’s home and furnishings department under most pressure due to the declining property market.

While Mr Mayfield ruled out job cuts, he added that the group needed to cut back on spending to get through the tough trading period, saying: “We’re not recruiting many people – only absolutely where necessary.”

Any potential redundancies at John Lewis would have to be approved by the partnership board, which has five elected members representing the wider staff.

The partnership governing system is based on principles laid down in 1919 by John Spedan Lewis, the son of the original founder.

He wanted a business able to make quick commercial decisions while representing the interests of workers, and giving them a share in the profits.