The chairman of employee-owned retailer John Lewis Partnership has ruled out “knee-jerk” job cuts in response to deepening gloom on the high street.
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.”
Last week it emerged that the firm’s major rival Marks & Spencer is slashing its redundancy terms for staff, which unions fear is a precursor to possible job losses.
But Mr Mayfield highlighted the differences between the partnership and other listed companies which are accountable to its shareholders.
John Lewis Partnership, which includes department store John Lewis and upmarket supermarket chain Waitrose, is owned by its 69,000 employees, known as “partners”.
“Our ownership structure is key here, because we’re owned by our partners, they want us to take a long-term not a short-term approach,” he said. “Our structure means that at these times we might take a different approach to some other businesses.”
But Mr Mayfield added that the group needed to cut back on spending to get through the tough trading period.
“We’ll certainly tighten up on costs, we’re not recruiting any people right now,” he said.
Although he denied a full recruitment freeze, he added: “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.
John Lewis’s partnership system is based on principles laid down by John Spedan Lewis, the son of the original founder, in 1919. He wanted a business able to make quick commercial decisions while representing the interests of workers and giving them a share in the profits.
John Lewis has not been immune from challenging retail conditions, with the company’s home and furnishings department being hit hard in a difficult property market. The department store chain reported a 4.2 per cent drop in sales last week, the tenth week out of 15 that sales have fallen, blaming the Olympic Games and the release of A-level results as the principal reasons for keeping shoppers at home.
Sales at the group’s flagship store in Solihull showed one of the largest declines in the country, down 11.1 per cent, although the worst performing store was in Peterborough where the fall was 18.7 per cent.
But sales at Waitrose were up 2.3 per cent on last year, although the partnership said poor weather continued to create challenging trading conditions.
The cold snap pushed up sales of tea and coffee, up eight per cent and 13 per cent respectively and sales of whisky and rum drove spirits up by nine per cent.
Official figures showing a slight rise in retail sales figures in July confounded expectations on the high street following the previous month’s fall of 4.3 per cent.
The British Retail Consortium expressed surprise at the 0.8 per cent rise reported by the Office for National Statistics, saying it painted a more positive picture than most retailers would recognise.