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John Lewis to make ‘steady reduction’ in staff numbers

John Lewis Partnership has forecast a gradual drop in the number of people it employs as productivity levels increase and it makes better use of technology.

John lewis2

John lewis2

John Lewis’s hanging garments facility at Magna Park

“We’re committed to creating better jobs for better-performing partners on better pay. Those jobs need to be more productive,” explained the partnership’s chairman, Sir Charlie Mayfield. “Of course, if you can achieve more in those jobs, you don’t need as many people in the partnership.

“Over time we do think we’ll see a reduction in the number of partners. It has risen consistently over the last 10 years or so – now we’ll see a steady reduction.” 

However, he also pointed out that the opening of new John Lewis department stores in Chelmsford and Leeds, on 29 September and 20 October respectively, would create around 1,000 jobs. 

This morning, the partnership – which includes John Lewis and supermarket Waitrose – revealed its pre-tax profit before exceptional items fell 14.7% to £81.9m during the half-year to 30 July, after it invested in keeping its pricing and staff pay rates competitive, as well as improving its distribution facilities.

John Lewis showed off two new distribution centres at its 2.4m sq ft Magna Park campus earlier this month – the results of a £150m investment.

“You don’t invest £150m without having some consequences,” John Lewis managing director Andy Street said today. “We have taken some choices in order to invest for the future and prepare ourselves for a brilliant second half.”

Mayfield reiterated that there has been no quantifiable impact on sales from the European Union referendum and said the business expects this to remain the case in the second half of the year.

He added: “Further forward – next year and the year after – weak sterling is likely to result in inflationary pressures. But it’s very hard to see how those will play out across the market.”

The partnership is currently hedged against any changes to currency exchange rates, but Street said: “We’ll be unwinding our hedging progressively through the year, so we will see increases in input prices during next year. What is not yet clear is how much of that will be passed on to the consumer. I expect, in a competitive market, a huge proportion of that to be absorbed by the retailer.

“I think we will see relatively modest price increases by the middle of next year. John Lewis is never knowingly unsold, so whatever happens in the market, our increases will be the least of anybody.”

Street admitted that a higher proportion of John Lewis’s sales came from price matched products in the first half, compared with the same period last year.

While he insisted this had not had a significant impact on its overall results, he added: “It gives a clue of just how competitive the market is at the moment … We are having to be even keener on price to win these sales gains.”

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