John Lewis Partnership Plc faces a reckoning this week as employees vote on whether they support Chairman Sharon White’s stewardship of the struggling British retailer.
(Bloomberg) — John Lewis Partnership Plc faces a reckoning this week as employees vote on whether they support Chairman Sharon White’s stewardship of the struggling British retailer.
Just weeks after it emerged that White could consider selling a stake in the business, which has been owned by its 74,000 employees for decades, a key council will be balloted on its opinion of the group’s strategy and direction.
White has been under scrutiny since reports surfaced in March that the partnership, which also owns the upmarket grocer Waitrose, could try to raise at least £1 billion ($1.3 billion) through a minority stake sale, as it grapples with a turnaround during the worst inflation crisis in decades.
On Tuesday and Wednesday, some 60 employee representatives will get a chance to voice their opinions on White’s strategy during a council meeting. The process will include two votes on support for her leadership.
The stakes are high after the UK’s largest employee-owned company scrapped staff bonuses and reported pretax losses for a third consecutive year in March. White, a former telecommunications regulator who took the reins at John Lewis in early 2020, has been selling stores and reducing staff in an overhaul. She has also been diversifying into real estate and financial services, a strategy that has yet to bear fruit.
“The confidence votes are a regular occurrence, and are seen as symbolic, and yet this may be because the results of the votes to-date have been supportive of the leadership,” said Patrick O’Brien, UK retail research director at consulting firm GlobalData Plc. “The situation now may be somewhat different, especially since the leadership has openly questioned the partnership structure and its financing.”
It’s not clear what level of vote would be considered damaging for White. Her predecessor Charlie Mayfield scored around 65% and over 75% support in equivalent votes cast in 2017 and 2018, according to the Retail Gazette.
“The lower the number, the more flaky her position becomes,” said Richard Hyman, a partner at advisory firm Thought Provoking Consulting.
Partners may be influenced by the recent scrapping of bonuses for the second time in three years. Over a decade ago they were receiving chunky payouts worth 18% of their annual salaries.
“The outlook for bonuses going forward is very poor, to say the least,” said Hyman.
The meetings are part of a twice-yearly procedure that allow partners to evaluate the company’s progress. Two votes will be cast. The first is looking back over the past year and expressing confidence in the progress under White, Chris Earnshaw, president of the council, said in the Gazette, the retailer’s internal magazine. The other is on support for her future strategy.
White cannot be ousted as a result of the votes, though the company’s constitution does allow the council to dismiss the chairman at any time in the event of failing to meet responsibilities.
The partnership reported a £234 million annual loss in March as inflation put pressure on the business and led shoppers to be more thrifty with their money. The retailer appointed a chief executive officer, Nish Kankiwala, for the first time in its history to help tackle the problems.
Writing in the Daily Telegraph, White recently pledged that she will preserve what makes John Lewis unique. She drew attention to a £100 million round of price cuts at Waitrose and John Lewis launching a new clothing range aimed at children aged 8 to 14. The partnership recently hired Tesco Plc’s former head of loyalty to launch a joint loyalty card next year across John Lewis and Waitrose.
“Our main efforts to change are about how we serve customers, and how we ensure we are on a strong financial footing in the future to continue to do so,” wrote White.
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