Property Is Hurting John Lewis. Can It Rescue It Too?

A significant write-down in the value of Waitrose stores was a factor that pushed the John Lewis Partnership to a £234M loss before tax in the period to 28 January 2023. But the retailer is hoping that another type of property might take it back into profit.

The loss for last year compares with a £27M before tax loss in the previous 12 months.

Before exceptional items, including the portfolio write-down, the loss was £78M on sales of £12B, the financial statement said. Sales in John Lewis department stores were up, but Waitrose grocery sales were down 3%.

“Far from diverting us from the partnership plan, the economic backdrop has galvanised us to go faster,” John Lewis Partnership Chair Sharon White said, pointing to a new £500M venture with abrdn in build-to-rent residential property. 

Over the next decade John Lewis Partnership hopes to deliver 10,000 BTR homes, with half coming from sites within its existing property portfolio, predominantly underused retail or closed stores. In the last year it closed two Waitrose stores. As much as 40% of profits will come from nonretail income streams by 2030, it said.

The retailer is quickly discovering that a move into property development is not without its perils. A proposal for a 144-unit build-to-rent scheme next to a store in Ealing, west London, has faced criticism from the local council. The latest iteration offers a project composed entirely of affordable homes.

The original proposals for a tower were drastically reduced, a move that lost a small number of BTR units.

A further proposal to redevelop a Waitrose store in Bromley, south London, will produce 350 units. Another scheme, still in the early stages, is proposed for a former warehouse site in Reading.

John Lewis set out its BTR ambitions in June 2022. The partnership with abrdn was announced in December 2022.